ELGIN, Ill.--(BUSINESS WIRE)--Oct. 18, 2000--The Middleby Corporation (NASDAQ: MIDD - news), a global supplier of equipment to the foodservice industry, today reported third quarter earnings of $.11 per share on net sales of $31,051,000 as compared to a $.06 per share loss on net sales of $31,988,000 in the prior year.
Net sales decreased by $937,000 or 2.9% from the prior year third quarter. The sales decrease came primarily in the international markets as the continuing strength of the U.S. dollar, particularly against the Euro, resulted in a lower relative value of sales reported in foreign markets. Sales of distributed third party product lines in the international markets were also less than the prior year due to the discontinuance of less profitable product lines in 1999 and 2000. The Company's domestic sales were comparatively flat with the prior year.
The gross margin rate improved to 35.1% in the third quarter of 2000 as compared to 31.8% in the prior year third quarter. The gross margin at the Company's U.S. manufacturing operations was favorably impacted by an increase in higher margin Middleby Marshall conveyor oven sales and the benefit of cost reduction actions implemented in the prior year. The gross margin at the international distribution operations also was improved in comparison to the prior year period as a result of the discontinuance of less profitable product lines.
Earnings before income taxes increased to $3,355,000 as compared to a loss before taxes of $126,000 in the prior year quarter, which included non-recurring charges of $1,248,000. The third quarter tax provision amounted to $2,012,000 as compared to a provision of $531,000 in the prior year period. The tax provision was recorded at a 60% effective rate reflecting losses reported at the Company's Asian operations, with no recorded tax benefit. Despite the recorded tax provision, the Company currently does not pay U.S. federal taxes, other than AMT tax, due to tax loss carryforwards available from prior years.
Net earnings were $1,108,000 as compared to a net loss of $657,000 for the third quarter of 1999. The earnings increase resulted from the improved gross margins and lower operating expenses. Net financing costs were also lower than the prior year due to lower interest expense on reduced debt balances. Net earnings for the third quarter also includes a $235,000 charge, net of tax, related to the early prepayment penalty of an 11% interest rate term note. Total debt at the end of the third quarter amounted to $10,004,000 as compared to $28,748,000 at the end of the prior year third quarter.
Commenting on the Company's third quarter, David P. Riley, President and Chief Executive Officer, said, ``The third quarter earnings were very solid, reflecting the operating improvements implemented throughout 1999 and 2000. However, net sales for the quarter were less than expected due to lower international sales, caused in part by the strength of the U.S. dollar in foreign markets. Despite the lower net revenues, the sales composition was favorable, which was reflected in the improved gross margin rate. We expect net sales in the fourth quarter of 2000 to exceed the prior year fourth quarter total of $31,588,000, however overall sales for the year will be lower than 1999 resulting from the discontinuance of less profitable manufactured and distributed product lines.''
Mr. Riley continued ``The Cooking Systems Group manufacturing operations continue to record overall sales and earnings growth. Improvements in the Philippines manufacturing operations continue to be made, however, the financial impact of these efforts has been limited through the end of the third quarter and provide an opportunity in the fourth quarter and into 2001. The international distribution operations continue to report improved earnings on lower sales due to a more focused product strategy. We expect this trend to continue for the remainder of the year.''
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, but are not limited to, 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, including those discussed under the heading entitled ``Risk Factors'' in the Company's Registration Statement on Form S-2 (No. 333-35397) filed with the Securities and Exchange Commission.
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 Middleby Marshall®, Southbend (R), and Toastmaster (R). Middleby's international subsidiary, Middleby Worldwide, is a leading exporter and distributor of foodservice equipment in the global marketplace and its international fabrication 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.
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THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in 000's, Except Per Share Information)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
Sept 30, Oct 2, Sept 30, Oct 2,
2000 1999 2000 1999
------- ------- -------- -------
Net sales $ 31,051 $ 31,988 $ 95,899 $100,953
Cost of sales 20,154 21,810 63,764 70,426
------- ------- -------- --------
Gross profit 10,897 10,178 32,135 30,527
Selling &
distribution
expense 3,880 4,817 12,135 14,158
General &
administrative
expense 3,035 3,356 11,089 10,181
Non-recurring
expense -- 1,248 -- 2,208
------- ------- -------- --------
Income from
operations 3,982 757 8,911 3,980
Interest expense
and deferred
Financing
amortization,
net 192 665 1,151 2,052
Other expense
(income), net 435 218 976 570
------- ------- -------- --------
Earnings (loss)
before income
taxes 3,355 (126) 6,784 1,358
Provision for
income taxes 2,012 531 4,310 1,963
------- ------- -------- --------
Net earnings
(loss) before
extraordinary
Item $ 1,343 $ (657) $ 2,474 $ (605)
======= ======= ======== ========
Extraordinary item
(net of tax) 235 -- 235 --
Net earnings
(loss) $ 1,108 $ (657) $ 2,239 $ (605)
Net earnings (loss)
before extraordinary
item per share:
Basic $ 0.13 $ (0.06) $ 0.24 $ (0.06)
======= ======= ======== ========
Diluted $ 0.13 $ (0.06) $ 0.24 $ (0.06)
======= ======= ======== ========
Net earnings (loss)
per share:
Basic $ 0.11 $ (0.06) $ 0.22 $ (0.06)
======= ======= ======== ========
Diluted $ 0.11 $ (0.06) $ 0.22 $ (0.06)
======= ======= ======== ========
Weighted average
number shares:
Basic 10,144 10,158 10,168 10,158
======= ======= ======== ========
Diluted 10,309 10,316 10,339 10,275
======= ======= ======== ========
THE MIDDLEBY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in 000's)
(Unaudited)
As of As of
Sept 1, Jan 1,
2000 2000
-------- --------
ASSETS
Cash and cash equivalents $ 7,812 $ 14,536
Accounts receivable, net 20,024 24,919
Inventories, net 16,832 16,884
Other current assets 3,945 4,039
-------- --------
Total current assets 48,613 60,378
Property, plant and equipment, net 19,214 21,281
Excess purchase price over net
assets acquired, net 13,322 13,962
Other assets 1,048 3,427
-------- --------
Total assets $ 82,197 $ 99,048
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt $ 2,882 $ 7,131
Accounts payable 7,148 8,861
Accrued expenses 17,100 16,291
-------- --------
Total current liabilities 27,130 32,283
Long-term debt 7,122 21,004
Other non-current liabilities 3,195 2,593
Shareholders' equity 44,750 43,168
-------- --------
Total liabilities and shareholders'
equity $ 82,197 $ 99,048
======== ========
The Middleby Corporation
David P. Riley, 847/429-7851
David B. Baker, 847/429-7915