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

$  202,609

 

$  194,620