THE MIDDLEBY CORPORATION

 


1400 Toastmaster Drive, Elgin, Illinois 60120 · (847) 741-3300 · Fax (847) 741-1689

 

 

The Middleby Corporation Reports Record Third Quarter Results

 

Elgin, IL, October 28, 2004 – The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of restaurant and foodservice cooking equipment, today reported record sales and earnings for the third quarter and first nine months ended October 2, 2004.  Net earnings for the third quarter, including a tax benefit of $3.2 million or $0.32 per share, were $10,368,000 or $1.03 per share on net sales of $70,621,000 as compared to the prior year third quarter net earnings of $5,651,000 or $0.59 per share on net sales of $60,894,000.  Excluding this tax benefit, net earnings for the quarter were $7,201,000 or $0.72 per share.  Net earnings, including the third quarter tax benefit, for the nine months ended October 2, 2004 were $24,248,000 or $2.42 per share on net sales of $205,996,000 as compared to net earnings of $12,857,000 or $1.37 per share on net sales of $182,695,000 in the prior year first nine months.   Excluding the third quarter tax benefit, net earnings for the first nine months of 2004 were $21,081,000 or $2.10 per share.

 

Financial Highlights

 

·            Net sales up 16.0% in the third quarter and 12.8% for the first nine months, reflecting the impact of new product introductions and favorable market conditions

 

·       Gross margin rate of 37.4% for the third quarter and 38.0% for the first nine months as compared to 37.2% and 35.2% in the prior year respective periods, reflecting the benefits of increased volumes and higher margins on new products offset, in part, by increased steel prices

 

·       Operating income margins of 17.8% for the third quarter and 18.1% for the first nine months improved from 16.4% and 14.3%, respectively in the third quarter and first nine months of 2003

 

·       Total debt reduced to $40,615,000 for the quarter ended October 2, 2004 from $48,315,000 at the end of the second quarter of 2004 and $56,500,000 at the end of 2003

 

·       Third quarter tax benefit of $3.2 million associated with an adjustment to tax reserves for closed tax years

 

“We are pleased with our 2004 performance to date,” said President and Chief Executive Officer Selim A. Bassoul.  “Sales growth momentum continues to fuel our strong financial results and reflects the impact of new products introduced in 2003 and 2004 and an increase in the replacement business with customers  upgrading older equipment.  We will continue to develop and introduce new products that address customer needs such as improved ergonomics, energy efficiency, speed of cooking, automation and safety.”  Mr. Bassoul continued, “During the third quarter the positive margin benefits from increased volumes and higher margin new product sales were partly offset by over $1 million in steel price increases as compared to last year’s third quarter.  These price increases, which are impacting many industries, are difficult to fully pass onto our customers and, thus, will continue to have a negative impact on margins in the short term.  We are committed to improve operating efficiencies and reduce operating costs in an effort to offset the impact of steel price increases and achieve higher profit margins.” 

William F. Whitman, Jr., Chairman of the Board, stated, “Strong cash flows funded the payment of a $0.40 per common share special dividend paid this July plus the pay down of $7.7 million of debt during the third quarter.  For the first nine months of the year we have been able to reduce debt by $15.9 million.”

 
Conference Call

 

A conference call will be held at 10:30 a.m. Eastern time on Friday, October 29 and can be accessed by dialing (800) 367-5339 and providing conference code 1820465.  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 (800) 642-1687 and providing code 1820465.  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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in 000’s, Except Per Share Information)

(Unaudited)

 

   Three Months Ended                      Nine Months Ended                                                                                        

                                               

 

3rd Qtr, 2004  

3rd Qtr, 2003  

3rd Qtr, 2004  

3rd Qtr, 2003  

Net sales

$  70,621

$  60,894

$  205,996

$  182,695

Cost of sales

   44,227

   38,261

   127,633

   118,360

 

 

 

 

 

    Gross profit

 26,394

 22,633

78,363

64,335

 

 

 

 

 

Selling & distribution expense   

    7,637

    7,259

23,340

22,201

General & administrative expense

     6,175

     5,388

      17,684

      16,097

 

 

 

 

 

    Income from operations

    12,582

    9,986

37,339

26,037

 

 

 

 

 

Interest expense and deferred          

 

 

 

 

    financing amortization, net

   643

   1,410

2,334

4,747

Loss (gain) on acquisition financing

    derivatives

 

(96)

 

32

 

(96)

 

(79)

Other expense (income), net

          46

      (254)

           317

           29

 

 

 

 

 

    Earnings before income taxes

11,989

8,798

34,784

21,340

 

 

 

 

 

Provision for income taxes

     1,621

     3,147

      10,536

       8,483

 

 

 

 

 

    Net earnings

$ 10,368

$   5,651

$    24,248

$   12,857

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

    Basic

$    1.12

$    0.63

$       2.63

$       1.42

 

 

 

 

 

    Diluted

$    1.03

$    0.59

$       2.42

$       1.37

 

Weighted average number shares:

 

 

 

 

 

 

 

 

 

    Basic

      9,241

      9,036

      9,232

      9,032

 

 

 

 

 

    Diluted

    10,040

      9,505

    10,019

      9,401

 

 

 

 

 

 

 

 

 

 

 

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in 000’s)

(Unaudited)

 

                                                                                                                                            

 

 

 

 

 

 

Oct 2, 2004

 

Jan 3, 2004

 ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$      2,633

 

$      3,652

 

Accounts receivable, net

    29,520

 

    23,318

 

Inventories, net

31,087

 

25,382

 

Deferred tax assets

11,810

 

12,839

 

Other current assets

       1,497

 

        1,776

 

    Total current assets

76,547

 

66,967

 

 

 

 

 

 

Property, plant and equipment, net

23,106

 

24,921

 

 

 

 

 

 

Goodwill

74,761

 

74,761

 

Other intangibles

26,300

 

26,300

 

Other assets

        1,661

 

        1,671

 

 

 

 

 

 

    Total assets

$  202,375

 

$  194,620

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

$             -

 

$    14,500

 

Accounts payable

15,042

 

11,901

 

Accrued expenses

      41,148

 

      37,076

 

    Total current liabilities

56,190

 

63,477

 

 

 

 

 

 

Long-term debt

40,615

 

42,000

 

Long-term deferred tax liability

8,264

 

8,264

 

Other non-current liabilities

14,132

 

18,789

 

 

 

 

 

 

Shareholders’ equity

      83,174

 

      62,090

 

 

 

 

 

 

    Total liabilities and shareholders’ equity

$  202,375

 

$  194,620