The Middleby Corporation (NASDAQ: MIDD), a leading worldwide
manufacturer of equipment for the commercial foodservice, food
processing and residential kitchen industries, today reported net
sales and earnings for the third quarter ended September 30, 2017.
Net earnings for the third quarter were $74,671,000 or $1.31 per
share on net sales of $593,043,000 as compared to the prior year
third quarter net earnings of $75,851,000 or $1.33 per share on net
sales of $574,224,000.
2017 Third Quarter Financial
Highlights
- Net sales increased 3.3% compared to
the prior year third quarter. Sales related to recent acquisitions
added $28.6 million or 5.0%, in the third quarter. The impact of
foreign exchange rates on foreign sales translated into U.S.
Dollars increased net sales by approximately $2.3 million, or 0.4%,
during the third quarter. Excluding the impact of foreign exchange
and acquisitions, sales decreased 2.1% during the third
quarter.
- Net sales at the company’s Commercial
Foodservice Equipment Group increased by $23.2 million, or 7.0%, to
$354.8 million in the third quarter as compared to $331.6 million
the prior year third quarter. During fiscal 2017, the company
completed the acquisitions of Sveba Dahlen and QualServ. Excluding
the impact of these acquisitions, sales increased 0.9% in the third
quarter, or 0.5% excluding the impact of foreign exchange.
- Net sales at the company’s Food
Processing Equipment Group increased by $4.7 million, or 5.7%, to
$86.9 million in the third quarter as compared to $82.2 million the
prior year third quarter. During fiscal 2017, the company completed
the acquisitions of Burford and CVP Systems. Excluding the impact
of these acquisitions, sales decreased 4.4% in the third quarter,
or 5.2% excluding the impact of foreign exchange.
- Net sales at the company’s Residential
Kitchen Equipment Group decreased by $9.2 million, or 5.7%, to
$151.3 million in the third quarter as compared to $160.5 million
in the prior year third quarter. Excluding the impact of foreign
exchange, sales decreased 6.0%.
- Gross profit in the third quarter
decreased to $228.5 million from $231.7 million. The gross margin
rate decreased to 38.5% from 40.4% for the third quarter,
reflecting lower margins at the recent acquisitions and less
favorable product mix at the Commercial Foodservice Equipment
Group.
- Operating income decreased 2.6% in the
third quarter to $118.3 million from $121.4 million in the prior
year quarter. Operating income during the third quarter of 2017
included $4.2 million of restructuring charges included cost
reduction initiatives primarily related to headcount reductions at
the Commercial Foodservice, Food Processing and Residential Kitchen
Equipment Group, as compared to $1.1 million in charges in the
third quarter of 2016.
- Non-cash expenses included in operating
income during the third quarter of 2017 amounted to $16.6 million,
including $7.5 million of depreciation and $9.1 million of
intangible amortization.
- Other income in the quarter was $1.1
million compared to $3.2 million of other expense in the prior year
quarter, consisting mainly of foreign exchange gains and
losses.
- The provision for income taxes during
the third quarter amounted to $38.1 million, at an effective rate
of 33.8%, as compared to a $36.0 million provision at a 32.2%
effective rate in the prior year quarter.
- Net earnings per share decreased 1.5%
to $1.31 in the third quarter as compared to $1.33 in the prior
year quarter. Net earnings in the current third quarter were
reduced by restructuring expenses. The impact of these items
reduced earnings per share by $0.05 and $0.01 in the 2017 and 2016
third quarter periods, respectively.
- Net debt, defined as debt less cash, at
the end of the third quarter amounted to $869.0 million as compared
to $663.6 million at the end of the fiscal 2016. Third quarter debt
reflected the funding of the Burford, CVP Systems, Sveba Dahlen and
QualServ acquisitions completed in the current year. Additionally,
during the third quarter the company repurchased approximately 1.7
million shares of Middleby common stock in the amount of $200.4
million under its stock repurchase program.
Selim A. Bassoul Chairman and Chief Executive Officer,
commented, “At the Commercial Foodservice Equipment Group, sales
grew at a slower rate due to the timing of purchases from our major
restaurant chain customers. We have a healthy pipeline of future
opportunities with existing and new large chain customers and
remain confident these opportunities will translate into future
revenues. The pipeline of innovative products is also strong,
positioning us for long-term growth as we provide solutions
addressing changing market trends and allowing for further
expansion in developing international markets.”
“We added several leading brands to our Commercial Foodservice
Equipment Group with the recent strategic acquisitions of Globe and
QualServ,” Mr. Bassoul continued. “Globe has a market leading
position in slicers and mixers and has deep relationships with our
existing dealer partners. We believe there are significant
opportunities for Globe to expand internationally and in the retail
supermarket segment as Middleby increases its product offerings,
including Globe products, targeting this market. QualServ provides
a recognized brand with leading capabilities for manufacturing
kitchen fabrication. We believe QualServ has substantial growth
opportunities offering customized fabricated equipment solutions
incorporating preparation, holding and warming technologies from
other Middleby brands, which will be a unique product offering to
the market through our strategic dealer partners.”
“At the Food Processing Equipment Group, revenue growth has been
impacted by delays of several anticipated larger orders and this is
expected to impact the remainder of the year. We continue to be
involved in working with customers in development projects for new
facilities in emerging markets and production expansion and
upgrades of existing plants. However, with this segment, timing of
orders on large projects can result in significant revenue
fluctuations from quarter to quarter.”
Mr. Bassoul continued, “At our Residential Kitchen Equipment
Group, the third quarter sales decline reflects the impact of lower
revenues at the AGA Group due to acquisition integration
initiatives. In an effort to simplify those businesses and reduce
costs, we have eliminated unprofitable products and reduced price
discounting for non-core business within that group. At Viking our
new products are receiving outstanding reviews and our sales team
and partners are very excited about how they are being received in
the market place. Additionally, we have continued to make
significant investments in the Viking brand with the establishment
of two residential brand centers in New York and Chicago, updating
displays of new products at our dealer partner showrooms and the
addition of company sales personnel. We believe we are positioned
to return to growth at the Viking brand, however in the current
quarter we continued to realize a sales decline as we overcome the
impact of the prior year product recall and legacy issues related
to products manufactured during the previous ownership.”
Mr. Bassoul added, “Despite top-line challenges, we continued to
maintain and expand our industry leading profit margins at all
three business segments. Through our enhanced focus on product
innovation, pricing discipline and operational excellence we
expanded our EBITDA margins despite short-term revenue declines and
the near-term dilutive effect from acquisitions. Our profit margins
in the quarter were also impacted by professional fees which
amounted to over $7 million, primarily associated with the
substantial acquisition activities that occurred during the second
and third quarters. We continue to execute on initiatives to
integrate recently acquired businesses and leverage synergies
across our residential platform. These opportunities along with an
improving top-line outlook, provide for continued margin expansion
for Middleby as we enter into 2018.”
Conference Call
A conference call will be held at 10 a.m. Central time on
Wednesday, November 8 and can be accessed by dialing (888) 391-6937
or (315) 625-3077 and entering conference code 6897766#. The
conference call is also accessible through the Investor Relations
section of the company website at www.middleby.com. A replay of the
conference call will be available two hours after the conclusion of
the call by dialing (855) 859-2056 and entering conference code
6897766#.
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 in the commercial
foodservice, food processing, and residential kitchen equipment
industries. The company's leading equipment brands serving the
commercial foodservice industry include Anets®, Bear Varimixer®,
Beech®, Blodgett®, Blodgett Combi®, Blodgett Range®, Bloomfield®,
Britannia®, Carter-Hoffmann®, Celfrost®, Concordia®, CookTek®,
CTX®, Desmon®, Doyon®, Eswood®, frifri®, Follett®, Giga®, Globe®,
Goldstein®, Holman®, Houno®, IMC®, Induc®, Jade®, L2F®, Lang®,
Lincat®, MagiKitch'n®, Market Forge®, Marsal®, Middleby Marshall®,
MPC®, Nieco®, Nu-Vu®, PerfectFry®, Pitco Frialator®, QualServ®,
Southbend®, Star®, Sveba Dahlen®, Toastmaster®, TurboChef®, Wells®
and Wunder-Bar®. The company’s leading equipment brands serving the
food processing industry include Alkar®, Armor Inox®, Auto-Bake®,
Baker® Thermal Solutions®, Burford®, Cozzini®, CVP Systems®,
Danfotech®, Drake®, Maurer-Atmos®, MP Equipment®, RapidPak®,
Spooner Vicars®, Stewart Systems® and Thurne®. The company’s
leading equipment brands serving the residential kitchen industry
include AGA®, AGA Cookshop®, Brigade®, Falcon®, Fired Earth®,
Grange®, Heartland®, La Cornue®, Leisure Sinks®, Lynx®, Marvel®,
Mercury®, Rangemaster®, Rayburn®, Redfyre®, Sedona®, Stanley®,
TurboChef®, U-Line® and Viking®.
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)
(Unaudited)
Three Months Ended
Nine Months Ended
3rd Qtr, 2017
3rd Qtr, 2016
3rd Qtr, 2017
3rd Qtr, 2016 Net sales $
593,043 $ 574,224 $ 1,702,683 $ 1,671,035 Cost of sales
364,524 342,496
1,030,106 1,009,032 Gross
profit 228,519 231,728 672,577 662,003 Selling, general
& administrative 106,044 109,140 325,710 334,131 Restructuring
expenses 4,218 1,149 17,437 8,145 Gain on sale of plant
- - (12,042)
- Income from operations 118,257 121,439
341,472 319,727
Interest expense and deferred financing
amortization, net
6,550 6,440 18,057 17,775 Other (income) expense, net
(1,068) 3,152
1,101 (1,486) Earnings
before income taxes 112,775 111,847 322,314 303,438
Provision for income taxes
38,104
35,996 99,372
100,158 Net earnings
$
74,671 $ 75,851
$ 222,942 $
203,280 Net earnings per share:
Basic
$ 1.31 $
1.33 $ 3.91 $
3.56 Diluted
$ 1.31
$ 1.33 $ 3.91
$ 3.56
Weighted average number shares:
Basic
56,810 57,022
57,070 57,032
Diluted
56,810 57,022
57,070 57,032
THE MIDDLEBY CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Amounts in 000’s)
(Unaudited)
Sep 30, 2017 Dec 31, 2016 ASSETS
Cash and cash equivalents $ 81,726 $ 68,485 Accounts
receivable, net 336,805 325,868 Inventories, net 425,932 368,243
Prepaid expenses and other 46,550 42,704 Prepaid taxes
10,512 6,399 Total current assets
901,525 811,699 Property, plant and equipment, net 275,365
221,571 Goodwill 1,158,654 1,092,722 Other intangibles, net 786,352
696,171 Long-term deferred tax assets 45,225 51,699 Other assets
34,022 43,274 Total
assets
$ 3,201,143 $
2,917,136 LIABILITIES AND STOCKHOLDERS’
EQUITY Current maturities of long-term debt $ 5,192 $ 5,883
Accounts payable 144,474 146,921 Accrued expenses
316,983 335,605 Total current
liabilities 466,649 488,409 Long-term debt 945,516 726,243
Long-term deferred tax liability 108,190 77,760 Accrued pension
benefits 325,127 322,988 Other non-current liabilities 44,159
36,418 Stockholders’ equity
1,311,502
1,265,318 Total liabilities and
stockholders’ equity
$ 3,201,143
$ 2,917,136
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107006931/en/
The Middleby CorporationDarcy Bretz, Investor and Public
Relations(847) 429-7756orTim FitzGerald, Chief Financial
Officer,(847) 429-7744
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