Exhibit 99.1
The Middleby Corporation Reports Record Second Quarter Results
ELGIN, Ill.--(BUSINESS WIRE)--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 XCEL(R) high
performance convection oven, the new series of Pitco Solstice(R) high
efficiency fryers and Blodgett Range(R). The Blodgett Range(R) 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 Blodgett(R), Blodgett Combi(R), CTX(R), MagiKitch'n(R),
Middleby Marshall(R), Pitco Frialator(R), 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
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.
THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in 000's, Except Per Share Information)
(Unaudited)
Three Months Ended Six Months Ended
2nd Qtr, 2nd Qtr, 2nd Qtr, 2nd Qtr,
2003 2002 2003 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
============== ==============
CONTACT: The Middleby Corporation
Selim A. Bassoul, 847-429-7788
David B. Baker, 847-429-7915
Timothy J. FitzGerald, 847-429-7744