ELGIN, Ill.–(BUSINESS WIRE)–The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of restaurant and foodservice cooking equipment, today reported record net sales and earnings for the fourth quarter ended January 3, 2009. Net earnings for the fourth quarter were $17,313,000 or $1.04 per share on net sales of $151,020,000 as compared to the prior year fourth quarter net earnings of $15,256,000 or $0.89 per share on net sales of $145,533,000.
Net earnings for the fiscal year ended January 3, 2009 were $63,901,000 or $3.75 per share on net sales of $651,888,000 as compared to net earnings of $52,614,000 or $3.11 per share on net sales of $500,472,000 in the prior fiscal year.
2008 Fourth Quarter and Full Year Financial Highlights
- During 2008, Middleby completed three strategic acquisitions, including New Star International, Inc. on December 31, 2007, FriFri on April 22, 2008, and Giga Grand Cucine S.r.l. on April 23, 2008. The financial results of these acquisitions are reflected in the 2008 statements of earnings and balance sheets from the date of acquisition.
- On January 5, 2009, subsequent to Middleby’s 2008 fiscal year end, the company also completed the acquisition of TurboChef Technologies, Inc. for $116.3 million in cash and 1,539,668 shares of Middleby common stock. The impact of this acquisition is not reflected in the 2008 statements of earnings and balance sheets.
- Earnings per share increased 17% to $1.04 in the fourth quarter of 2008 as compared to $0.89 in the fourth quarter of 2007. For the full year, earnings per share increased 21% to $3.75 in 2008 from $3.11 in 2007.
- Net sales rose 3.8% in the fourth quarter and 30.3% in the 2008 fiscal year reflecting the impact of acquisitions. Excluding the impact of acquisitions, sales declined 14.4% during the fourth quarter and 4.6% for the full year. Sales of the Commercial Foodservice Group declined 11.5% for the fourth quarter and 2.6% for the year, while sales of the Food Processing Group declined 29.3% for the quarter and 16.7% for the full year. Sales at both the commercial foodservice segment and food processing segment were impacted by the economic slowdown which occurred late in the third quarter of 2008.
- Operating income increased by 9.7% to $30,157,000 from $27,501,000 for the quarter and by 28.7% to $119,618,000 from $92,933,000 for the year.
- Depreciation and amortization amounted to $2.1 million in the 2008 fourth quarter and $12.4 million for the entire year as compared to $1.5 million in the 2007 fourth quarter and $6.4 million for the 2007 full year. Increased expense for fiscal 2008 reflects amortization and depreciation associated with the recent acquisitions.
- Net interest expense and deferred financing costs amounted to $3,072,000 in the fourth quarter and $12,982,000 for the entire year as compared to $2,512,000 in the prior year fourth quarter and $6,650,000 in the 2007 full year. Increased interest expense reflects higher levels of debt to fund acquisition activities.
- Total debt at the end of the 2008 fourth quarter amounted to $234,700,000 as compared to $257,653,000 at the end of the third quarter 2008 and $96,197,000 at the end of the 2007. Net borrowings were increased during the year by $204,693,000 to fund acquisition related activities, including the purchase of Star, Giga and Frifri. The Company also repurchased $12,359,000 its common stock during the third quarter of 2008.
- Immediately subsequent to year end, the company completed its acquisition of TurboChef Technologies. Year-end debt on a pro-forma basis reflecting the TurboChef acquisition would have amounted to approximately $369,004,000. The TurboChef transaction was funded under the Company’s $497,500,000 senior revolving credit facility. The senior revolving credit facility matures in December 2012.
- The senior revolving credit facility requires, among other things, the company maintain a leverage ratio of less than 3.5x and a minimum fixed charge coverage ratio of 1.25x. On a pro-forma basis, immediately after giving effect to the TurboChef transaction, the company’s leverage ratio was approximately 2.25x and the fixed charge coverage ratio was approximately 8.0x.
Selim A. Bassoul Chairman and Chief Executive Officer said, “We are pleased to report record fourth quarter and 2008 results despite the challenging environment. Business conditions were difficult during the fourth quarter due to the general economic situation. However, we were able to lessen this impact with cost reduction measures and improved profitability from recent acquisitions.”
Mr. Bassoul continued, “In 2009, we expect the business environment to continue to be difficult. We have taken, and continue to further implement measures, to reduce our costs to adjust our business to lower business volumes in the near-term. Additionally, we anticipate continued reduced costs of steel would benefit the second quarter and second half of the year. We are continuing to focus on acquisition integration initiatives and other strategic measures which will improve long-term profitability of the company. In addition to cost related synergies, we are implementing measures to better leverage our infrastructure across the brands to increase our product penetration in existing customer accounts, while at the same time better control our selling and distribution costs.”
Mr. Bassoul added, “We are excited about our most recent acquisition of TurboChef. TurboChef is the leader in the speed cook category of the commercial foodservice segment and compliments Middleby’s portfolio of leading brands and innovative technologies in commercial cooking. We are in process of improving the profitability of this business unit, including initiatives to reduce redundant corporate overhead expenses and reorganization of the residential business to bring costs in line with the current revenues. Additionally, cost reduction initiatives to realize synergies in the commercial oven business are underway. Despite the more difficult business environment we believe we are on target to achieve our expected profit objectives and anticipate that this acquisition will be accretive to earnings in 2010.”
Bassoul further commented, “We continue to focus on our new product initiatives, which should help offset reduced demand levels in the first half. We are rolling out our Blodgett hydrovection oven with a major restaurant chain customer and have several other products on test. Products such as the TurboChef I-Series ovens, the Middleby Marshall Mini-WOW! Conveyor Oven and the Pitco Rocket Fryer we believe will gain momentum during the year.”
Conference Call
A conference call will be held at 10:00 a.m. Central time on Thursday, March 5 and can be accessed by dialing (866) 439-4712 and providing conference code 554461# or through the investor relations section of The Middleby Corporation website 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 and providing code#. A transcript of the call will also be posted to the company’s 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 commercial food cooking, preparation and processing. The company’s leading equipment brands serving the commercial foodservice industry include Blodgett®, Blodgett Combi®, Blodgett Range®, Bloomfield®, Carter Hoffmann®, CTX®, frifri®, Giga®, Holman®, Houno®, Jade®, Lang®, MagiKitch’n®, Middleby Marshall®, Nu-Vu®, Pitco Frialator®, Southbend®, Star®, Toastmaster®, TurboChef® and Wells®. The company’s leading equipment brands serving the food processing industry include Alkar®, MP Equipment®, and RapidPak®. The Middleby Corporation was recognized by Business Week as one of the Top 100 Hot Growth Companies of 2007 and 2008, by Crain’s Chicago Business as one of the Fastest 50 Growth Companies in 2007 and 2008, and by Forbes as one of the Best Small Companies in 2007 and 2008.
For more information about The Middleby Corporation and the company brands, please visit www.middleby.com.
THE MIDDLEBY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in 000’s, Except Per Share Information)
(Unaudited)
Three Months Ended
Fiscal Year Ended
4th Qtr, 2008
4th Qtr, 2007
2008
2007
Net sales
$ 151,020
$ 145,533
$ 651,888
$ 500,472
Cost of sales
93,525
90,555
403,746
308,107
Gross profit
57,495
54,978
248,142
192,365
Selling & distribution expenses
13,850
14,194
63,593
50,769
General & administrative expenses
13,488
13,283
64,931
48,663
Income from operations
30,157
27,501
119,618
92,933
Interest expense and deferred
financing amortization, net
3,072
2,512
12,982
6,650
Other (income), net
616
(643
)
2,414
(1,696
)
Earnings before income taxes
26,469
25,632
104,222
87,979
Provision for income taxes
9,156
10,376
40,321
35,365
Net earnings
$ 17,313
$ 15,256
$ 63,901
$ 52,614
Net earnings per share:
Basic
$ 1.08
$ 0.96
$ 4.00
$ 3.35
Diluted
$ 1.04
$ 0.89
$ 3.75
$ 3.11
Weighted average number shares:
Basic
15,958
15,881
15,978
15,694
Diluted
16,690
17,180
17,030
16,938
THE MIDDLEBY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in 000’s)
(Unaudited)
Jan 3, 2009
Dec. 29, 2007
ASSETS
Cash and cash equivalents
$ 6,144
$ 7,463
Accounts receivable, net
85,969
73,090
Inventories, net
91,551
66,438
Prepaid expenses and other
7,646
10,341
Prepaid taxes
–
17,986
Current deferred tax assets
18,387
11,095
Total current assets
209,697
186,413
Property, plant and equipment, net
44,757
36,774
Goodwill
266,663
134,800
Other intangibles
125,501
52,581
Other assets
7,880
3,079
Total assets
$ 654,498
$ 413,647
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current maturities of long-term debt
$ 6,377
$ 2,683
Accounts payable
32,543
26,576
Accrued expenses
102,579
95,581
Total current liabilities
141,499
124,840
Long-term debt
228,323
93,514
Long-term deferred tax liability
33,687
2,568
Other non-current liabilities
23,029
9,813
Stockholders’ equity
227,960
182,912
Total liabilities and stockholders’ equity
$ 654,498
$ 413,647
