THE MIDDLEBY CORPORATION

 1400 Toastmaster Drive, Elgin, Illinois 60120 · (847) 741-3300 · Fax (847) 741-9561

 

 

THE MIDDLEBY CORPORATION REPORTS

RECORD THIRD QUARTER RESULTS

 

 

Elgin, IL, October 24, 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 $5,651,000 or $0.59 per share on net sales of $59,254,000 for the third quarter ended September 27, 2003 compared with net earnings of $4,337,000 or $0.47 per share on net sales of $57,679,000 in the prior year third quarter.   Earnings for the nine months ended September 27, 2003 were $12,857,000 or $1.37 per share on sales of $177,616,000 as compared to net earnings of $8,191,000 or $0.90 per share on net sales of $174,648,000 in the prior year nine months.

 

Net sales in the third quarter increased by 2.7% over net sales of the prior year quarter.  The increase in net sales reflects growth in international markets driven by restaurant openings of major foodservice chains and the success of new product introductions.  

 

Gross profit in the third quarter of 2003 was $22,633,000 as compared to $20,464,000 in the third quarter of the prior year.  The gross margin rate in the third quarter improved to 38.2% versus 35.5% for the prior year quarter.  Gross margin improvement reflects continued operating efficiencies driven by product standardization programs and volume increases.  Gross margins also benefited from an improved sales mix with greater sales of higher margin product, driven in part by new product introductions and the elimination of less profitable product offerings.

 

Selling and distribution expense increased to $7,259,000 from $7,042,000 in the prior year quarter primarily due to higher spending on marketing and training programs associated with new product introductions and promotion of the company brands.  General and administrative expenses increased to $5,388,000 from $4,475,000 in the prior year quarter.  The increase in general and administrative expenses included higher settlement costs to resolve legal cases and provisions to increase reserves for idle facility leases exited in conjunction with prior year plant consolidation efforts associated with the Blodgett acquisition.

 

Operating income in the third quarter of 2003 increased to $9,986,000 as compared to $8,947,000 in the third quarter of the prior year.  The operating income margin improved to 16.9% in the third quarter as compared with 15.5% for the prior year. 

 

Interest expense and other non-operating costs amounted to $1,188,000 in the third quarter of 2003 as compared with $3,050,000 in the prior year quarter.  Interest expense decreased from the prior year third quarter by $1,251,000 as a result of lower interest rates resulting from the refinancing of debt in the fourth quarter of 2002 and repayment of high interest notes in August 2003.  Total debt was reduced during the first nine months of 2003 by $25,812,000 to $62,150,000 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 are pleased with the third quarter performance.  The results of the third quarter demonstrate continuing gains in operating efficiencies and an improvement in gross margins resulting from efforts to direct our sales focus on high margin products.  We will continue efforts to increase margins through material cost reduction programs and product standardization initiatives.” 

 

Mr. Bassoul continued, “We continue to invest heavily on the development of innovative products focused on energy savings, labor savings and increased speed of cooking.  During the third quarter we successfully introduced the Southbend Platinum Series of heavy duty sectional ranges, broilers and griddles at the National Association of Food Equipment Manufactuers (NAFEM) industry trade show.  We are also excited about the existing pipeline of products in development that we anticipate to introduce over the next twelve months.” 

 

William F. Whitman, Jr., Chairman of the Board, added, “During the quarter the company prepaid $16.0 million of the high interest rate notes due to Maytag Corporation associated with the acquisition of Blodgett.  These notes carried an average interest rate of 12.5%.  The note repayment and overall reduction in debt of $18.9 million during the quarter was primarily funded from operating cash flows.” 

 

A conference call will be held on Monday morning at 10:30 a.m. Eastern Time on October 27, 2003. You are invited to listen to the call by calling 1 (800) 374-0538 and providing password 3669798.  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 webcast of the conference call can also 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 3669798.  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, 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 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                      Nine Months Ended                                                                                        

                                                                                                                                             

 

3rd Qtr, 2003  

3rd Qtr, 2002  

3rd Qtr, 2003  

3rd Qtr, 2002  

Net sales

$  59,254

$  57,679

$  177,616

$   174,648

Cost of sales

   36,621

    37,215

   113,280

    114,770

 

 

 

 

 

    Gross profit

 22,633

 20,464

64,336

59,878

 

 

 

 

 

Selling & distribution expense   

    7,259

    7,042

22,202

21,575

General & administrative expense

    5,388

     4,475

      16,098

     16,439

 

 

 

 

 

    Income from operations

    9,986

    8,947

26,036

21,864

 

 

 

 

 

Interest expense and deferred           

 

 

 

 

    financing amortization, net

   1,410

   2,661

4,746

8,783

Loss (gain) on acquisition financing

    derivatives

 

32

 

(95)

 

(80)

 

(109)

Other expense (income), net

      (254) (254)

        484

           29

          395

 

 

 

 

 

    Earnings before income taxes

8,798

 5,897

21,341

12,795

 

 

 

 

 

Provision for income taxes

     3,147

      1,560

       8,484

       4,604

 

 

 

 

 

    Net earnings

$   5,651

$    4,337

$     12,857

$     8,191

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

    Basic

$    0.63

$     0.48

$       1.42

$       0.91

 

 

 

 

 

    Diluted

$    0.59

$     0.47

$       1.37

$       0.90

 

Weighted average number shares:

 

 

 

 

 

 

 

 

 

    Basic

      9,036

     8,991

      9,032

     8,979

 

 

 

 

 

    Diluted

      9,505

      9,202

      9,401

     9,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THE MIDDLEBY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Amounts in 000’s)

(Unaudited)

 

                                                                                                                                            

 

 

 

 

 

 

Sept. 27, 2003

 

Dec. 28, 2002

 ASSETS

 

 

 

 

 

Cash and cash equivalents

$      4,090

 

$      8,378

 

Accounts receivable, net

    28,200

 

    27,797

 

Inventories, net

25,477

 

27,206

 

Deferred tax assets

9,929

 

13,341

 

Other current assets

       1,186

 

        1,069

 

    Total current assets

68,882

 

77,791

 

 

 

 

 

 

Property, plant and equipment, net

25,505

 

27,500

 

 

 

 

 

 

Goodwill

74,761

 

74,761

 

Other intangibles

26,300

 

26,300

 

Other assets

        1,766

 

        1,610

 

 

 

 

 

 

    Total assets

$  197,214

 

$  207,962

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

$    13,900

 

$    14,400

 

Accounts payable

22,723

 

13,488

 

Accrued expenses

      28,596

 

      36,013

 

    Total current liabilities

65,219

 

63,901

 

 

 

 

 

 

Long-term debt

48,250

 

73,562

 

Long-term deferred tax liability

7,878

 

7,878

 

Other non-current liabilities

18,063

 

17,989

 

 

 

 

 

 

Shareholders’ equity

      57,804

 

      44,632

 

 

 

 

 

 

    Total liabilities and shareholders’

 

 

 

 

        equity

$  197,214

 

$  207,962