THE MIDDLEBY CORPORATION
1400 Toastmaster Drive, Elgin, Illinois
60120 · (847) 741-3300 · Fax (847) 741-9561
THE MIDDLEBY CORPORATION REPORTS
RECORD SECOND QUARTER RESULTS
Elgin, IL, July 28, 2003 - The Middleby Corporation (NASDAQ: MIDD), one of the world’s leading manufacturers and marketers of restaurant and foodservice cooking equipment, today reported record net earnings of $4,597,000 or $0.49 per share on net sales of $63,595,000 for the second quarter ended June 28, 2003 compared with net earnings of $2,814,000 or $0.31 per share on net sales of $62,478,000 in the prior year second quarter. Earnings for the six months ended June 28, 2003 were $7,206,000 or $0.77 per share on sales of $118,362,000 as compared to net earnings of $3,854,000 or $0.43 per share on net sales of $116,969,000 in the prior year first half.
Net sales in the second quarter increased by 1.8% over net sales of the prior year quarter. The net sales increase reflects the impact of market share gains and new product introductions offsetting difficult economic conditions during the second quarter affecting the foodservice equipment industry and generally lower purchases by large chain customers.
Gross profit in the second quarter of 2003 was
$22,650,000 as compared to $21,521,000 in the second quarter of the prior
year. The gross margin rate in the
second quarter improved to 35.6% versus 34.4% for the prior year quarter. Improvement in the gross margin resulted
from cost reduction actions implemented in the second quarter of last year,
which included the consolidation and closure of two manufacturing
facilities. Gross margin improvement
also benefited from an improved sales mix with greater sales of higher margin
product, driven in part by new product introduction.
Selling and distribution expense increased to
$7,780,000 from $7,312,000 in the prior year quarter primarily due to higher
spending on marketing and advertising programs associated with new product
introductions and promotion of the company brands. General and administrative expenses decreased to $5,226,000 from
$6,013,000 in the prior year quarter as a result of prior year cost reduction
actions related to the acquisition and integration of Blodgett.
Operating income in the second quarter of 2003
increased to $9,644,000 as compared to $8,196,000 in the second quarter of the
prior year. The operating income margin
improved to 15.2% in the second quarter as compared with 13.1% for the prior
year. The improvement in operating
income margin reflects the increase in gross margins and lower operating
expenses.
Interest expense and other non-operating costs
amounted to $1,729,000 in the second quarter of 2003 as compared with
$3,292,000 in the prior year quarter.
Interest expense decreased from the prior year second quarter by
$1,401,000 as a result of lower debt levels and lower interest rates resulting
from the refinancing of debt in the fourth quarter of 2002. Total debt was reduced during the first six
months of 2003 by $6,922,000 to $81,040,000 from $87,962,000 at December 28,
2002.
Commenting on the company’s performance for the quarter, Selim A. Bassoul, President and Chief Executive Officer, said, “We were pleased with the second quarter net sales increase in a difficult economic environment. The war in Iraq and the outbreak of SARS created uncertainty with our customers, which slowed the rate of store openings and orders from our customers during the first half of this year. We have, however, experienced a rebound in our order rate in the later half of the second quarter.”
Mr. Bassoul continued, “The increase in net sales during the quarter resulted largely from market share gains due in part to new product introductions, which include the Blodgett XCELÒ high performance convection oven, the new series of Pitco SolsticeÒ high efficiency fryers and Blodgett RangeÒ. The Blodgett RangeÒ line is a completely new market for Blodgett, which had solely offered ovens in the past. We continue to invest heavily on the development of innovative products and are working closely with our customers to introduce unique products focused on energy savings, labor savings and increased speed of cooking. We expect to introduce additional products in the second half of 2003 that should benefit our sales efforts moving into 2004. We have increased our training and advertising programs in an effort to bring these new product introductions to market quickly.”
William F. Whitman, Jr., Chairman of the Board, added, “Now that we have realized most of the benefit from the immediate cost reduction opportunities of the Blodgett acquisition, we are focusing greater efforts on the improvement of operating efficiencies to increase margins. These efforts include standardization of product platforms and the reduction of material costs through greater leveraging of the supplier base. In June, we were pleased to announce the appointments of Mr. Magdy Albert as Vice President of Operations of our Elgin manufacturing facility and Mr. Nestor Ibrahim as Vice President of Supply Chain Management to further these efforts. Mr. Albert comes to Middleby from Vulcan Hart, a division of Illinois Tool Works, where he was General Manager of their steam equipment manufacturing facility. Mr. Ibrahim comes from Franke where he was responsible for supply chain management.”
Mr. Whitman continued, “Moving into the second half
of this year we anticipate further reduction of our debt. We have the opportunity to begin to repay
high interest notes due to Maytag Corporation related to the acquisition of
Blodgett. At the end of the second
quarter these notes amounted to $21,040,000 and carried an average interest
rate of 12.5%. Our cash flow generation
and debt reduction in the second half of the year should increase as compared
to the first half as we move away from our peak working capital requirements
driven by seasonal high sales in the second quarter.”
A conference call will be held on Tuesday
morning at 10:30 a.m. Eastern Time on July 29, 2003. You are invited to listen
to the call by calling 1 (800) 374-0538 and providing password 1960955. Analysts and money managers who may
participate in the question and answer portion of the conference call will be
sent an invitation detailing their separate call-in number. The conference call will also be webcast at mms://winaudio.mshow.com/120733.asf,
which can be accessed via the Investor Services section of The Middleby
Corporation website at www.middleby.com. Digital replay of the call will be available
approximately one half hour after the completion of the conference call. The
replay may be accessed by calling 1(800)
642-1687 and providing password 1960955. 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 leader in the design, manufacture, marketing and service of a broad line of equipment used for cooking and preparation of food in commercial and institutional kitchens and restaurants throughout the world. The company’s leading equipment brands include Blodgettâ, Blodgett Combiâ, 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 and its international manufacturing subsidiary, Middleby Philippines Corporation, is a leading supplier of specialty equipment in the Asian markets.
For further information about Middleby, visit the company’s World Wide Web site,
http://www.middleby.com.
Contact: Selim A. Bassoul, Chief Executive Officer – 847- 429-7788
David B. Baker, Chief Administrative Officer – 847- 429-7915
Timothy J. FitzGerald, Chief Financial Officer – 847- 429-7744
THE
MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in 000’s, Except Per Share Information)
(Unaudited)
Three Months Ended Six Months Ended
|
|
2nd
Qtr, 2003 |
2nd
Qtr, 2002 |
2nd
Qtr, 2003 |
2nd
Qtr, 2002 |
|
Net sales |
$ 63,595 |
$ 62,478 |
$ 118,362 |
$ 116,969 |
|
Cost of sales |
40,945 |
40,957 |
76,660 |
77,555 |
|
|
|
|
|
|
|
Gross profit |
22,650 |
21,521 |
41,702 |
39,414 |
|
|
|
|
|
|
|
Selling & distribution expense |
7,780 |
7,312 |
14,942 |
14,533 |
|
General & administrative expense |
5,226 |
6,013 |
10,709 |
11,964 |
|
|
|
|
|
|
|
Income from operations |
9,644 |
8,196 |
16,051 |
12,917 |
|
|
|
|
|
|
|
Interest expense and deferred |
|
|
|
|
|
financing amortization, net |
1,623 |
3,024 |
3,337 |
6,122 |
|
Loss (gain) on acquisition financing derivatives |
(42) |
579 |
(111) |
(14) |
|
Other expense (income), net |
148 |
(311) |
283 |
(89) |
|
|
|
|
|
|
|
Earnings before income taxes |
7,915 |
4,904 |
12,542 |
6,898 |
|
|
|
|
|
|
|
Provision for income taxes |
3,318 |
2,090 |
5,336 |
3,044 |
|
|
|
|
|
|
|
Net earnings |
$ 4,597 |
$ 2,814 |
$ 7,206 |
$ 3,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ 0.51 |
$ 0.31 |
$ 0.80 |
$ 0.43 |
|
|
|
|
|
|
|
Diluted |
$ 0.49 |
$ 0.31 |
$ 0.77 |
$ 0.43 |
|
Weighted average number shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
9,033 |
8,974 |
9,031 |
8,973 |
|
|
|
|
|
|
|
Diluted |
9,353 |
9,082 |
9,325 |
9,031 |
THE MIDDLEBY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in 000’s)
(Unaudited)
|
|
|
|
|
|
|||
|
|
June 28, 2003 |
|
Dec. 28, 2002 |
||||
|
ASSETS |
|
|
|
|
|||
|
Cash and cash equivalents |
$ 3,912 |
|
$ 8,378 |
|
|||
|
Accounts receivable, net |
31,837 |
|
27,797 |
|
|||
|
Inventories, net |
27,815 |
|
27,206 |
|
|||
|
Deferred tax assets |
10,004 |
|
13,341 |
|
|||
|
Other current assets |
1,365 |
|
1,069 |
|
|||
|
Total current assets |
74,933 |
|
77,791 |
|
|||
|
|
|
|
|
|
|||
|
Property, plant and equipment, net |
26,304 |
|
27,500 |
|
|||
|
|
|
|
|
|
|||
|
Goodwill |
74,761 |
|
74,761 |
|
|||
|
Other intangibles |
26,300 |
|
26,300 |
|
|||
|
Other assets |
1,654 |
|
1,610 |
|
|||
|
|
|
|
|
|
|||
|
Total assets |
$ 203,952 |
|
$ 207,962 |
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|||
|
|
|
|
|
|
|||
|
Current maturities of long-term debt |
$ 13,500 |
|
$ 14,400 |
|
|||
|
Accounts payable |
8,328 |
|
13,488 |
|
|||
|
Accrued
expenses |
36,934 |
|
36,013 |
|
|||
|
Total current liabilities |
58,762 |
|
63,901 |
|
|||
|
|
|
|
|
|
|||
|
Long-term debt |
67,540 |
|
73,562 |
|
|||
|
Long-term deferred tax liability |
7,878 |
|
7,878 |
|
|||
|
Other non-current liabilities |
18,048 |
|
17,989 |
|
|||
|
|
|
|
|
|
|||
|
Shareholders’ equity |
51,724 |
|
44,632 |
|
|||
|
|
|
|
|
|
|||
|
Total liabilities and shareholders’ |
|
|
|
|
|||
|
equity |
$ 203,952 |
|
$ 207,962 |
|
|||
|
|
|
|
|
|
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