MIDD News The Middleby Corporation Reports Record Third Quarter Results
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 third quarter ended September 30, 2006.
Net earnings for the third quarter were $12,177,000 or $1.48 per share
on net sales of $103,239,000 as compared to the prior year third quarter
net earnings of $9,628,000 or $1.19 per share on net sales of
$80,937,000. Net earnings for the nine months ended September 30, 2006
were $31,318,000 or $3.79 per share on net sales of $304,837,000 as
compared to net earnings of $24,945,000 or $3.09 per share on net sales
of $239,738,000 in the prior year nine month period.
Third Quarter Financial Highlights
Net sales rose 27.6% in the third quarter. The net sales increase in
the third quarter reflects the impact of acquisitions, which accounted
for 20.3% of sales growth for the quarter. Excluding acquisitions,
sales rose 7.3% in the third quarter, resulting from new product sales
and continued growth in restaurant chain business.
Operating income increased by 29.1% to $21,021,000 from $16,284,000,
reflecting the benefit of increased sales. As a percentage of sales,
operating income increased to 20.4% from 20.1% in the prior year,
reflecting the impact of increased operating leverage on higher sales
levels. Operating margins also improved from 19.3% in the second
quarter of 2006 reflecting continued improvements in profitability
resulting from integration initiatives associated with the Alkar
RapidPak business unit acquired in December 2005.
The company began expensing stock options during the first quarter of
2006 as a result of the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 123r: "Accounting for Stock Based
Compensation", resulting in an increase to general and administrative
expenses of $238,000 during the third quarter and a reduction to net
earnings of $168,000 or $0.02 per share. No such expense was recorded
in the third quarter of 2005.
Interest expense increased to $1,618,000 in the third quarter as
compared to $1,579,000 in the prior year quarter as increased interest
rates offset the favorable impact of reduced debt levels.
The 2005 and 2006 third quarters both reflect a benefit from favorable
adjustments to tax reserves associated with closed tax periods. The
2006 third quarter reflected a tax benefit of $350,000 or $0.04 per
share as compared to a tax benefit of $722,000 or $0.09 per share in
the third quarter of 2005.
Operating cash flows were utilized to reduce total debt by $12,115,000
during the third quarter to $97,229,000 as compared to $109,344,000 at
the end of the second quarter of 2006 and $121,595,000 at the
beginning of the year. The net reduction in debt is inclusive of
approximately $8.6 million of debt incurred to fund the acquisition of
Houno, which was completed during the third quarter of 2006.
Mr. Selim A. Bassoul Chairman and Chief Executive Officer said, "We were
very pleased with the results of the third quarter. We continued to make
progress at our newly acquired Alkar Rapidpak business unit, which
contributed favorably to the quarter. In addition, each of our brands
also realized sales growth during the quarter, resulting from increased
business with restaurant chains and the benefit of new product
introductions. As we move into 2007, we remain excited about the
pipeline of new products focused on speed of cooking, energy savings,
and automation.”
Mr. Bassoul further commented, “We continue to
address the rising costs of steel and other materials, through supply
chain initiatives and other operating improvements. Despite the
unfavorable impact of increased material costs, we realized gross margin
expansion across the company. This margin improvement was offset by the
impact of lower gross margins at the recent acquisitions, which continue
to improve as integration initiatives are realized.”
Mr. Bassoul concluded, “We are also very
excited about the acquisition of Houno A/S announced during the quarter.
The acquisition enables Middleby to further advance its cooking
technologies and expand its product offerings in the growing combi-oven
market, a market which exceeds $400 million worldwide. Houno has
revenues of approximately $10 million concentrated in Denmark, Sweden
and the United Kingdom. Houno’s products are
known for their advanced control systems, self cleaning capabilities and
unique design. Combined with Middleby’s
resources, we will be able to market Houno’s
products to a larger audience.”
Conference Call
A conference call will be held at 11:00 a.m. Eastern time on Tuesday,
November 7 and can be accessed by dialing (800) 367-5339 and providing
conference code 1389461 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 (800) 642-1687
and providing code 1389461. 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 volatility in
earnings resulting from goodwill impairment losses; variability in
financing costs; quarterly variations in operating results; dependence
on key customers; international exposure; foreign exchange and political
risks affecting international sales; protection of trademarks,
copyrights and other intellectual property; 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 restaurants, institutional kitchens and food processing
operations throughout the world. The company’s
leading equipment brands include Alkar®,
Blodgett®, Blodgett
Combi®, Blodgett
Range®, CTX®,
Houno®, MagiKitch’n®,
Middleby Marshall®,
Nu-Vu®, Pitco
Frialator®, RapidPak®,
Southbend®, and
Toastmaster®.
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.
