THE MIDDLEBY CORPORATION
1400 Toastmaster Drive, Elgin, Illinois
60120 · (847) 741-3300 · Fax (847) 741-1689
The Middleby Corporation
Reports Record Second Quarter Results
Elgin, IL, July 22, 2004 – The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of restaurant and foodservice cooking equipment, today
reported record sales and earnings for the second quarter and first half year ended July 3, 2004. Net earnings for the second quarter were $8,289,000 or $0.82 per share
on net sales of $72,913,000 as compared to the prior year second quarter net earnings of $4,597,000 or $0.49 per share on net sales of $65,408,000. Net earnings for
the six months ended July 3, 2004 were $13,880,000 or $1.39 per share on net sales of $135,376,000 as compared to net earnings of $7,206,000 or $0.77 per share on
net sales of $121,801,000 in the prior year first half.
Financial Highlights
· Net sales up 11.5% in the second quarter and 11.1% for the first half year, reflecting favorable impact of new product introductions and continued penetration of
fast growing segments, such as fast casual and casual dining
· Gross margin rate of 39.5% for the second quarter and 38.4% for the first half year as compared to 34.6% and 34.2% in the prior year respective periods,
reflecting the benefits of increased volumes and higher margins on new products
· Operating income margins of 20.1% for the second quarter and 18.3% for the first half year improved from 14.7% and 13.2%, respectively in the second
quarter and first half year 2003
· Total debt reduced to $48,315,000 for the quarter ended July 3, 2004 from $53,650,000 at the end of the first quarter of 2004 and $56,500,000 at the end
of 2003
“We are pleased with our strong first half performance for 2004,” said President and Chief Executive Officer Selim A. Bassoul. “Sales growth continues to build upon the momentum established in 2003 and the first quarter of 2004 and reflects the impact of new products introduced in 2003, such as the Platinum series range lineup with
waterproof controls and non-clogging burners. In addition, after several years of underinvestment our customers are beginning to accelerate their replacement cycle of
older equipment, which is becoming more expensive to operate and maintain.” Mr. Bassoul continued, “We introduced a number of patented new products at an annual
national trade show in the second quarter of this year which were well received by our customers. Our company has been working closely with customers to develop
products that include features any chef would love, including bigger dials, cool to the touch handles, and simplified loading designs. These ergonomic features, when
combined with faster cooking speed and energy savings technology have started to positively impact sales.”
William F. Whitman, Jr., Chairman of the Board, stated, “During the second quarter we amended our credit agreement, which provides for increased flexibility and more favorable interest rates. We continue to generate strong cash flows and we were able to reduce debt during the second quarter by over $5.3 million while also funding
working capital needs. We were also pleased to declare a $0.40 per common share special dividend in May of this year which was paid to shareholders at the beginning
of this year’s third quarter.”
Reclassification of
Shipping and Handling Costs
Subsequent to the issuance of the consolidated financial statements for the period ended April 3, 2004, the company determined that the costs incurred for shipping and
handling should have been classified as a component of cost of sales rather than as a reduction of net sales. As a result, the statement of earnings for the three and
six month periods ended June 28, 2003 have been restated to reflect the costs incurred for shipping as a component of cost of sales rather than a reduction in net sales.
The correction in classification of these costs has no impact on net earnings. The company will amend its Form 10-Q filings for the quarters ended September 27, 2003
and April 3, 2004, and its Form10-K/A filing for the year ended January 3, 2004 to restate the financial statements to reflect the correction in the classification of these costs.
Conference Call
A conference call will
be held at 10:30 a.m. Eastern time on Friday, July 23 and can be accessed by
dialing
1(800) 374-0538 and
providing password 8922138. Members of
the financial community who participate in the question and answer session will
receive a separate call-in number. A
webcast of the conference call can be accessed through investor services at www.middleby.com.
A digital replay of the call will be available approximately
one half hour after
its completion and can be accessed by calling 1(800) 642-1687 and
providing password
8922138. A
transcript of the call will also be posted on the
company website.
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 cooking and food preparation in commercial and institutional kitchens and restaurants throughout the world. The company’s leading equipment brands include Blodgettâ, Blodgett Combiâ, Blodgett Rangeâ, CTXâ, MagiKitch’nâ, Middleby Marshallâ, Pitco Frialatorâ, Southbendâ, and Toastmasterâ. Middleby’s international
subsidiary, Middleby Worldwide, is a leading exporter and distributor of foodservice equipment in the global marketplace. Middleby’s international manufacturing subsidiary,
Middleby Philippines Corporation, is a leading supplier of specialty equipment in the Asian markets.
For further information about Middleby, visit www.middleby.com.
Contact: Darcy Bretz, Investor and Public Relations, 847-429-7756
David Baker, Chief Administrative Officer, 847-429-7915
Timothy FitzGerald, Chief Financial Officer, 847-429-7744
THE MIDDLEBY CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Amounts
in 000’s, Except Per Share Information)
(Unaudited)
Three Months Ended Six Months Ended
|
|
2nd
Qtr, 2004 |
2nd
Qtr, 2003(1)
|
2nd
Qtr, 2004 |
2nd
Qtr, 2003(1)
|
|
Net sales |
$ 72,913 |
$ 65,408 |
$ 135,376 |
$ 121,801 |
|
Cost of sales |
44,120 |
42,758 |
83,407 |
80,099 |
|
|
|
|
|
|
|
Gross profit |
28,793 |
22,650 |
51,969 |
41,702 |
|
|
|
|
|
|
|
Selling & distribution expense |
8,327 |
7,780 |
15,703 |
14,942 |
|
General & administrative expense |
5,813 |
5,226 |
11,509 |
10,709 |
|
|
|
|
|
|
|
Income from operations |
14,653 |
9,644 |
24,757 |
16,051 |
|
|
|
|
|
|
|
Interest expense and deferred |
|
|
|
|
|
financing amortization, net |
794 |
1,623 |
1,691 |
3,337 |
|
Loss (gain) on acquisition financing
derivatives |
2 |
(42) |
- |
(111) |
|
Other expense (income), net |
78 |
148 |
272 |
283 |
|
|
|
|
|
|
|
Earnings before income taxes |
13,779 |
7,915 |
22,794 |
12,542 |
|
|
|
|
|
|
|
Provision for income taxes |
5,490 |
3,318 |
8,914 |
5,336 |
|
|
|
|
|
|
|
Net earnings |
$ 8,289 |
$ 4,597 |
$ 13,880 |
$ 7,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ 0.90 |
$ 0.51 |
$ 1.50 |
$ 0.80 |
|
|
|
|
|
|
|
Diluted |
$
0.82 |
$ 0.49 |
$ 1.39 |
$ 0.77 |
|
Weighted average number shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
9,237 |
9,033 |
9,228 |
9,031 |
|
|
|
|
|
|
|
Diluted |
10,048 |
9,353 |
10,008 |
9,325 |
(1) Subsequent to
the issuance of the consolidated condensed financial statements for the period
ended April 3, 2004, the company determined that the costs incurred for shipping
and handling should have been classified as a
component
of cost of sales rather than as a reduction of net sales. As a result, net sales for the three and six
month periods ended June 28, 2003 were restated from $63,595,000 and
$118,362,000 in the previously reported results
to
$65,408,000 and $121,801,000, respectively.
Cost of sales for the three and six month periods ended June 28, 2003
were restated from $40,945,000 and $76,660,000 in the previously reported
results to $42,758,000 and $80,099,000, respectively.
THE MIDDLEBY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts
in 000’s)
(Unaudited)
|
|
|
|
|
|
|||
|
|
July
3, 2004 |
|
Jan
3, 2004 |
||||
|
ASSETS |
|
|
|
|
|||
|
Cash and cash equivalents |
$ 2,952 |
|
$ 3,652 |
|
|||
|
Accounts receivable, net |
30,597 |
|
23,318 |
|
|||
|
Inventories, net |
28,855 |
|
25,382 |
|
|||
|
Deferred tax assets |
12,872 |
|
12,839 |
|
|||
|
Other current assets |
1,102 |
|
1,776 |
|
|||
|
Total current assets |
76,378 |
|
66,967 |
|
|||
|
|
|
|
|
|
|||
|
Property, plant and equipment, net |
23,607 |
|
24,921 |
|
|||
|
|
|
|
|
|
|||
|
Goodwill |
74,761 |
|
74,761 |
|
|||
|
Other intangibles |
26,300 |
|
26,300 |
|
|||
|
Other assets |
1,563 |
|
1,671 |
|
|||
|
|
|
|
|
|
|||
|
Total assets |
$ 202,609 |
|
$ 194,620 |
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|||
|
|
|
|
|
|
|||
|
Current maturities of long-term debt |
$ - |
|
$ 14,500 |
|
|||
|
Accounts payable |
15,118 |
|
11,901 |
|
|||
|
Accrued expenses |
37,267 |
|
37,076 |
|
|||
|
Total current liabilities |
52,385 |
|
63,477 |
|
|||
|
|
|
|
|
|
|||
|
Long-term debt |
48,315 |
|
42,000 |
|
|||
|
Long-term deferred tax liability |
8,264 |
|
8,264 |
|
|||
|
Other non-current liabilities |
17,148 |
|
18,789 |
|
|||
|
|
|
|
|
|
|||
|
Shareholders’ equity |
76,497 |
|
62,090 |
|
|||
|
|
|
|
|
|
|||
|
Total liabilities and shareholders’ |
|
|
|
|
|||
|
equity |
|||||||