MIDD - Earnings call transcript Q1 2020 | The Middleby Corporation

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Operator

Hello, and welcome to the Middleby Corporation First Quarter 2020 Conference Call.

With us today from management are Tim FitzGerald, Chief Executive Officer; Bryan Mittelman, Chief Financial Officer; and David Brewer, Chief Operating Officer. Please note, there are slides in the investors section middleby.com to accompany today's call.

We will start the call with comments from management and then open for Q&A. [Operator Instructions]

turn over to Mr. like I'd the to call Now FitzGerald. Please sir. go ahead, J. Timothy FitzGerald

Tim FitzGerald

we call Middleby the for all and us website. note in press found morning thank for Relations morning. can that slides release, today's our to at Good reference purposes, you be addition section Please this joining have for posted call Investor on which the of the

have start our the like to the to they employees organization the would recognizing thanking call of I and crisis Middleby across entire as COVID-XX. responded the by

Our the assure Middleby employees, to safety clock our team has and worked our continuity the around ensure onset the from meet of needs business. pandemic of customer of continued the the

our to the Our issues globe on to daily have reduced commitment. of it and have a until people surfaced personal of as quick that be also and their on recovery. hourly to grateful around for has action made we salaries, schedules, very employees work the furlough basis. begin necessary address I'm by see been I'm work and many can-do multitude personal cases, business appreciative a sacrifices in attitude the hours, adjust demonstrated have taken

situation, sanitation management office, our first this for the employees. able identified to protection assessed staggered work-at-home included distancing, actions shifts, of safety, In response to and out enhanced the protocols travel those implemented team which of and swiftly and crisis, employee our risks be ensure the to, standards foremost, at-risk restrictions, social

have of the to customers. continuity service also and importantly availability teams moved our ensure Our product to quickly

and service, support, business our We shipping place to have across in of parts service goods. customer technical finished continue infrastructure

Despite in service been able identify potential team issues and chain across that to the disruption. could moved have production result challenges mitigate uninterrupted maintain to we interruption business Our service with globe, to introduce or the exception. that businesses new the initiative to periods proud teams brief quickly with I'm limited from very took the needs COVID-XX. address of customers safety our our across only arising also products and to to supply note

you include find number stations, deck, retail touchless produced cleaning and company, Deutsche. for slide for which hand a service the NXX these at products, shields food our of and mobile safety stations units and In restaurants plexiglass can sanitizer, most recent hand locations, masks, mobile washing and sterilization acquired

for during the As to have on we we segments. the decline incoming press seen in three comparison that prior business our business, our immediate orders all a April sharp impact month in the in outlined In our during April total, declined year. XX% release across of orders of the

our as our However, the seen the to sequential initial business businesses. wave working as the changes past begin early from we all global three customers of conditions. improvement continue each to disruption reengage segments essential foodservice the in of week industry industry, the we serve supporting in month April remain trough orders In and as operational over have in customers to after

month our of for UK through our provisions as April that were down in the down and shut retail U.S.A. put group, The of significantly locations are April, place. in markets orders incoming part large generated In Residential XX%. during were revenues both the were shelter-at-home

business and reopenings result. stabilize impacted expect a now to month. and has to past improve are perhaps continue the as starting We orders over Builder seeing been

rescheduled. further will anticipate as back activities come are that we However, online construction projects

for the Food record backlog incoming our year. we of the with of quarter projects strong with year strength the continued throughout entered a the a pipeline Group, and At Processing orders first

and projects, cases, ongoing our customer impacted given installations complete ability has inability in to access some to travel and COVID-XX restrictions sites.

provides this a and in result, and is disrupted for the for order Despite the of COVID-XX this quarters. on as of stability impact operations, several the employees the of reflected decline on April backlog strong next activities, XX%. focused were expectedly, has customers, segment this Our their which disruption,

in demand processing, continue food strong to our and support equipment particularly customers, processing we across segment. at see which for meat ongoing we activity the requirements this Additionally, anticipate will

we XX% April as Foodservice the to decline largest segment, mid-March. At foodservice orders starting were the in incoming a with impact in other establishments close in saw restaurants Commercial mandated and

adapted the curbside weeks, as expand. business Over following our pickup drive-through customers and delivery, to continued

enhance such Pulse into delivery-focused research. Our customers Pulse, with sales streamlined early Technomic Miller April by and and week May, have have analysts improved restaurant adapted as also through as to menus Miller profitability. each sequentially reported Baird Accordingly, industry

eating have groups as has size health larger at and check better delivery for retail, or that people care, home. quick-serve and this reflecting are out Sectors drive-through such increased, include C-stores during takeout restaurants as fared and families delivery, pizza. or Average offering with orders period

systems seen shutdown. our those Many system school early to refresh with also during with government affected programs. less certain We've activities programs continue budgeted started school as operations, cases, and and customers they have in the foodservice continuing to university be and of their appear

fine hardest. customers and been dining hit casual independent the dining Our have

some not unfortunately, are While many locations to offer may reopen. and cases, have curbside dine-in they in closed, pickup, started largely

seen responses although remains our considerably similar reopen, impacted. to in have the including we first the U.S. impact the seen restaurants traffic and across what the the experience customers to In market market. to Internationally, very dine-in, pandemic, we globe China, are have

XX%, which down market, remained sharply order and by January down in in XX% in approximately approximately Our QX late April. in improved were rates starting this

U.S.A. and in service, is of existing XX% business Given the through of from large our installed restaurants much initiatives, comprising changes revenues. our and menu generated base the approximately equipment replacement, operating around world, the

downturn. impact As a result, we of to the are positioned a withstand

safety is both new from emerge employees enact customers. it that expected we and for protocols the will operators As crisis,

This ordering; trends delivery the greater include dining, to increase likely will on existing focus of in off-premise many see added the drive-through; service kitchens. of smaller focus will continued including and kitchens; with locations, the space efforts crisis prior models, menu; food C and a development and with simplify dining nontraditional continued new We foodservice ghost and and on to accelerate. including utilization along rooms in throughput, along modular retail store; emergence mobile

to given remote operation restaurant will a these challenge continue through greater IoT, trends, is there automation. solutions and and primary investments focus Middleby will XXXX, the for our we made to and XXXX offerings that R&D on of a operators, be The monitoring course emerging have of be customers. technology, trends. data well us during with significant and positioned positioned in use of into Labor analytics, our decision growth for broad-based

of many exception while to and refrigeration, our analytics by safety meaningful Kitchen understanding is and a monitoring kitchen. issues whether functionality, Open automation, IoT it be other recent system, any cloud-based dollars lighting by any connecting the in food connecting Powerhouse we of happening provide equipment, Open and platform labor all and their of With what any capture customers device. a is IoT bring saving only the Kitchen Dynamics, cooking elements of connected face savings together our data users connectable address any through proven the energy millions any better that control, platform any our record launch adding the of kitchen, equipment, has providing real-time operations automation probes open platform HVAC handheld of

increasing be automation. Middleby will our simplified, be With introduction connectivity and process Connect Control will and user year, this error and operation equipment reducing enhanced Middleby the training requirements, of wear continued

and team solutions, and technologies utilizing integrating working analytics. robotics across LXF past the has kitchen automation Our Middleby process ghost been the leading utilizing those data year, hard automated equipment over at developing

more labor connected smaller a provide a can in footprint. kitchen, We and flexible utilizing less

We kitchen our have ventless in also invested platform.

that kitchen broadest and provide portfolio longer without foodservice support operations have all cooking This a be solutions. can is and the hood. nontraditional equipment as we We anywhere kitchen aspects of smaller, provides suited locations. of expensive can opened ventless operation No ventilation less required to a

food touchless operations solutions orders quality. that and or complications the a to restaurant simplifies longer stage to with importantly, QR can cabinet, customers PUC staff, greater dasher the text This received And our in does a provides Our delivery associated door our mobile safety be with accessed system customer for significantly with delivery customers employees. code include no via which pickup interact increases device. on solution need resulting a and utilizing

so a we this period, strong through position. uncertain financial As we do move with

We completed of of prior the to have credit COVID-XX. facility are just facility recently refinancing the our pleased to credit onset

have have and cash positive respond of taken flow the reshape business current will allow impact downturn. generate significant will we profitability upcoming we our in throughout to the the to the period, expect, environment, us and effect main actions COVID-XX the Although to

I will QX over turn and the Bryan it now to further financials comment results. on

Bryan Mittelman

Thanks Tim.

For $X.XX in the per first share earnings quarter, prior we generated the year. versus of GAAP $X.XX

the two reporting for been as we well. last quarters, likely you'll have recall, adjusted As EPS

primarily earnings, the For of over When we impact year, non-GAAP GAAP the year. in recently $X.XX tables impact prior part issued the excludes of included is was activities in the are businesses morning. versus and acquisitions the and RAM quarter. in QX, of impact, from for recent including the past reconciliation on most it drag brands accounting. the evaluating operational was the restructuring acquired the QX, from press release $X.XX Deutsche that this purchase This ongoing acquired to inventory a $X.XX the

For QX, revenues or X.X% declined X.X% organically.

relatively was compared to the EBITDA year million. $XXX adjusted at flat company Total prior

challenges Our of mostly markets. EBITDA addressing declining XX.X% from XX.X% face the margin improved of in slightly the to

existed future. that investments ensure in our even conditions our position global for these business through managing we the the the continued While leadership to before pandemic,

later. company. I to across on we aggressive the taken recently, further More measures have cut costs these comment will

over results, $XX QX for that SG&A reviewing note added million the expenses quarter. from acquisitions When please

However, efforts to represents will GAAP as the our total. pandemic decline the $X and This associated in second restructuring impacts do this in culmination costs was global initiated million quarter. not from XXXX. and seen transition which cost control of were approximately related Charges qualify charges from Restructuring offset revenue start be the actions efforts. to largely in under

comments on can organic segment year-over-year geographic The prior segment. the Within sales basis I changes provide reported also will tables in analysis. to information release about keep a release, our press find shorter to revenues performance in press calls. each you for seek than the QX about my today the

information quarter. to on We have also the and slides the share website included our on commentary additional Investor Relations in

revenues within certain pockets impacted spread and globally. orders rapid in as as sales as then limited operations organization. to declines quarter disruptions Asia impacting in This greatly What COVID-XX quick Foodservice, and out expanded of us in decline had in obviously the led manner. a some Commercial in our the well well For in Europe, the as late was China weakness in impacts started as as

In be pleased EBITDA Commercial the recent delivering continued prior Foodservice XX.X% representing to improvements This acquired margins $XXX spite year businesses we compares excluding improve to acquisitions. when exchange XX.X% in XX.X% in various or quarter. the sales, years. challenges, We were of recent million, to foreign to over of amounted year. the and of prior top line at for Adjusted impacts

impacted way, premium we’re able segment. saw of the were Residential our decline the generate sales levels the weakness a onto would super alone spot of across is Moving imported under modest In basis, of XX.X% we U.S. a Brava, improved drag about by growth ongoing otherwise products, for sales. persisted the transition this is additional to I’d of impacting our organic product. experienced experiencing by Margins where we also of not which On regions acquisition lower Brexit internationally. that noted son’s favorite sales the our pandemic. to the seen be have driven decline talk face X%. my and the other Middleby of total X%. all market while conditions like X.X% By are from an impacts headwinds We manufacturing and from the refrigeration under-counter Internationally, we and in

However, I have wondering you call. that until future about a keep to

will future are a in season we the here outdoor quarter. but the arrival of excited on more cooking for say, Midwest, Although that I in

the to onto for adjusting organic foreign in exchange the prior Food growth So product and we of EBITDA Processing XX.X% period X% as to generate our acquisitions. did XX.X% when quarter, improved year the slightly offerings. compared protein segment, margins where in for largely

forward, quarters for backlog provides segment existing the and of the revenues business in Looking margins. upcoming terms this stability for

credit us briefly it’s to the January, $XX Having has excellent agreement, essentially to $XXX drawn facility fully a annually. agreement and and at less term our our which principal for we The term segments annual life currently. which five-year made loan on comprised million during a required gone through term elaborate has this the payments facility bowering want In a provides of than $X.XX changes QX, I do quarter. during the loan, three liquidity billion million minimal is The of the revolver. amended

to EBITDA acquisitions. us reported income Xx otherwise results. expand agreement the This at is mostly than generally is the our including the defined under facility to pension may the our under the availability EBITDA from in Actual credit not credit generally non-cash and adjusted that higher is due defined EBITDA. I management and certain benefit note EBITDA X.Xx in situations as also as agreement after

from This billion trailing on XX at of So end availability over $XXX debt the a relevant Based that million in month $X.X QX. million. had is $XXX nearly gross bank results we EBITDA of at our us net perspective the to availability. time,

During borrowings cash up the our to balance quarter, increase $XXX to build we did our million.

maintain U.S. quarters’ actually debt, does our measure was However, it this current impact end. billion cash at in as net in at We’ve to the we which a continued build as cash prudent the additional environment. $X.X not

ongoing is borrowings $XXX of the with cash remainder since the million. operating is end of over a of Our increase March additional positive million balance as The from of flows. result as our today $XXX

overall I higher point X.X%. our be Please borrowings. the realize cost interest is would expense of due increased to also that our amount that future gross interest approximately out quarters will in

impacted While profitable current we our cash to numerous flows free are is this pandemic, It and operating belief global and the times, being to that to remain cash the we this coming have be generating continue we cash net actually are able our over made comments deeply positive well. on execute flow positive by in months. manner debt flows. will I as certainly commented applies I’ve operating same strong reduce

remainder forward compared look by to for of levels. XXXX the year, to spending at would least we our plans reduce As expenditures capital the be XX%

to me leverage. short brings but on This important a discussion

QX borrowings at we end at of I noted, EBITDA the We as X.XXx. of are typically were to limited Xx

As earlier, million. availability the cash of in interest us business very we $XXX while of level leave this the noted all strongly have The nearly current low facility generating combination leverage environment. of I positioned at our availability model, the rates, into

aggressive back cutting We to from actions will that momentarily. cost benefits I’ll also see our come

record generate first flows of $XX did quarter We cash for operating million.

a in as is compared for increase rebates. compared matters flow offset seasonal collections by to by $XX inventory and in Our $XX of million more prior driven payments cash amount favorable This free compensation activity, the was million year. various the year to improvement timing and prior the modest

over environment expect capital While monetize business our certainly continue working we the the present to to months. current challenges, do coming will

are Last quarter, approach I key the over noted that improving to our long-term. three factors to margins

from continuity continuing best cost integration conditions, business improve achieved to operations supply during three, this the While harnessing control recent are same different facing this processes. we currently at actions these and ensure execute factors We one, efforts capabilities drive help that practices two, chain on of and benefits leverage pandemic. to and acquisitions; through initiatives our scale; our

all current Given and and the We’ve the reviewed aggressively of circumstances, reduced have types beyond gone actions. expense company every our within controllable costs. have these discretionary efforts

through response other has actions, We made furloughing permanent tight placed workforce in controls production receipts extremely largely reductions. have company reduced near-term in to terms the our both also achieved disbursements on levels. We daily. and expenditures. of personnel all We This measure been demand across and decrease the functions we’ve

of have costs reduced XX%. excess been in Personnel

appropriate evaluate various of staffing to compensation employees the scenarios. to cash the levels forecasted the We hundreds additional for for continue future of and remainder reduced also executives We year.

control SG&A reliable are expenses sharing decreases of half forecast in well, margins we can and broadly costs. some as XX% challenges with future of currently, tight through high scenarios. reducing comment confidence a over Given ensuring I production cut EBITDA sale approximately on Even only realize and if in XX% degree by our

margins we positive generate digit As net flows. double earnings should and cash a company, still EBITDA and

The face challenges numerous. we are

for positioned long-term success. we are However,

for highly is industry experienced. decades. in of been have Our leaders our management Most multiple team this

an strong flows. people, cash profitability, industry-leading Beyond the which dedication that have to structure existing cost leads generates our we of

While of from and every different, track we vigor managing with a is through stronger. record decisiveness and them we have emerge crisis them

With questions. that Tiffany, to please open the call

Operator

Hammond Instructions] the with Markets. question comes Jeff Capital from first [Operator Your line Keybanc of

Jeff Hammond

Hey, morning guys. good

Bryan Mittelman

Good morning, Jeff.

Jeff Hammond

Thanks in That really, for presentation. detail the the all great helpful. was really

segment, some give a decrementals any and bit, the you And what If start out? second XQ just by you decrementals you like? and look? given think cost little color would into taking, those look the be You framework, could can that’d Bryan, gave how think you look get things as half do but kind the then, I normalize as helpful. also flush into you’re actions of you If maybe on to think touch how you all first

Bryan Mittelman

we that, different seeing are Obviously, obviously or shared processing, in that’s there order food of the indications. indications best would to where down The where orders information, our I’ll add And we say, little we start I caveat have bit scenarios. a backlog. but dynamics one that’s a we modeling

a we XX% are there that to in the going for suggesting not decrease quarter. see I’m So revenues

hard a it’s using really specific apply very the even orders the And as answer offer margins, profit operating EBITDA gross whether situation, for in to that level we to beyond, it’s me see the proxy. And comments So, and or commercial again, will a residential. declining. those

lots have scenarios of out We there.

we’re think in starting the marketplace. all but momentum to positive slow see I

it’s So there. specific point up out me really hard this for and we at things in commentary picking quarters But offer see from a to three time. two

Jeff Hammond

– on guess question decremental was my margin. My Yes.

So the if margins decline would you decremental saw similar like? for rates what look XQ, order to

Bryan Mittelman

be Again, we the being don’t extremely still going EBITDA double But revenue I’m margins – to model, of that my that, digit either as would with is EBITDA it margins extent the that. But no primarily best it up in the decline leave Obviously worse revenue their half. recovery. I’ll than hopefully everyone or comments, will I come could get – anticipate in but depend be we cut offer exact on the to decreases. to on specific said it I company. not guidance. There don’t will for

Jeff Hammond

on month. of through talked Is you versus us like of sense mean, those to orders way then what April were the into give May And rate you about April down. just there I improvement orders, more. kind give for of exit the exited were certainly any but color numbers which as one sharply the great Okay. and a total kind

Bryan Mittelman

a was that, provide possible, So get I would entire circumstances. that we But better variable I the think exiting obviously the mentioned XX% it. certainly weekly information the average normal in as say, to month. of I’ll XX% so caveat I much can trying people we’re to as XX% the sense month. be were orders for than even

– consistent XXth climb, in see when last step XXth the seen of and did then we’d So even week a through ending Xrd our and XXth, trough up. was we April consistent week

So of types we for potential look, a were assumption prepared – the all are is just that it right? April think a while, right? toughest, is here, turned off for outcomes I us, people including Because but is

I mean, work-at-home look head situations jesting to was business, what that dealing for going pandemic, not their the with only for was around, everybody our like, us, getting customers. their

view a and can belief our Again, the April world is going here, not have order kind So the toughest be orders to again, sales. the that of reporting period. everybody incoming was of for probably we’re month

came So a with April. a better backlog of going to we in into bit

well And revenues activities of be. what next think of orders see that incoming move indicators had So outpace that. as some we couple our improvement likely as on will through based we of there’s that kind the just – these behind shared months as we’ll we

Jeff Hammond

Okay. helpful. Bryan. That’s Thanks, very

Operator

Your Mig comes Dobre with from Baird. next line question the of

Mig Dobre

morning, Good Thank much. everyone. you very

business many I wondering also all incremental I was a I’m I you buckets realign how these different. versus associated maybe the margin had think little is, that is for costs might how is you. cost on about savings And that us of a of help world. I something that. can when of This post-COVID the thinking question of of million some you nature structural of this know can roughly in Jeff’s you’ve to here supposed Bryan, guess, you help maybe $XX talk to that’s what sort cost taken figure year. buckets? doing that you temporary be action ask top with of you – to this with much understand were the you purely Thank more dollar want bit plan think sort on, I

Bryan Mittelman

to I excess it’s variable. on area much the dollars mean, because Yes. much to takeout. in referred The are certainly so are of quarterly if we than $XX an of COGS of of is harder it SG&A the largely cost specific million Thinking number $XX kind the a there not little a a get and on targeting on that basis side, higher million, millions after

think obviously and about the or may you go what causes you through variable Now, thought given fixed been really in decrements business to the you have as challenge, in now, and you versus semi-fixed. it seeing we’re fixed cost

to costs, I I in what cost certainly yet or or expect or definition So that expect don’t also We temporary. or let’s is the enough the new run be rate are rate to Because be. on call have solid are run production the on don’t into actions new what level But turn semi-permanent. specific of going plan mean, we of that of a understanding other have some number is SG&A. going them them the we yet taken it’d of we’ve kind of whether lot support of a honestly,

anything obviously, side, out close on our sure goal the So those I the on And on extent going same yet. bringing SG&A the be again, possible. to not same as we figure. with of classify side, kind cutting I’m at COGS permanent is certainly revenue the that as – though, a as level SG&A in costs attack put the number there them not to The to of isn’t exactly the down decrement even side,

Mig Dobre

obviously, demand I’ve and that’s not maybe April, back other to April, day. it’s XXX%. a asked in down at looking one right, is of XX% but demand peers helpful question this same down All And color. the of But your going

still I’m give that of as equipment, of going that this folks what to how customers, economy customers of do demand reopened? it sense is this about that type I us still So the have for that base of exactly, of expect buying some purchasing, you think you the wondering are they’re set guess or can – forward a progress as you business – and type you what

Tim FitzGerald

there’s helpful, out deck And largely. tried it’s to we’ve the if our then replacement, requirement, – by service different segments demand new, a break X, parts – the business Mig, what’s out slide got which including what’s So what’s element we there. there. Page

I there are so of – actually it’s a kind there is think And – across lot. look, so,

is we’ve by such I So a replacement operating. all brands. all of are got We’ve of quick-serve lot frankly some a think different lot of them And They’re there’s – segments variety, zero. it driven they’re to at base None a that where but creep these business. stores maintaining got and of kind are continued pizza businesses the of up. still as level

multiple of And hit I is places the at restaurants day. and I to drive-throughs booked she’s are My all a daughter go and today busy. DoorDash lot and

so are And – be into were continue programs coming expanding segments – C down and which online. stores, those to there’s their They retail, which and turned this. programs beverage service food

seeing some they’re and in now that. And in happening invest even given a time of continue people to activity because that’s food. seeing coming looking still for that good to rollout frequenting, confidence it’s kind We’re them

an we obviously them. even like. the a look still – on only doing A again, in of we’re bit universities there’s institutional side, a of in leader I not medical going mentioned albeit school but have the system hospitals. systems what we and classrooms there’s business the And comments ice – into machine retail, to going a of that kind as summer are into healthcare do hey, But goes in that schools of budgets a business. you. business expectations have of the segment will know, e-learning what we’re I early we lot held those I We about, kind opening for to lot that so actually our school little healthcare or And lot So And are have in summer. meaningful started store, strong, think a have is – C pretty healthcare a be our the refrigeration, uncertain areas. discussion spending and provide

on leisure, the the is still of really and So an dining a but But about an executing particularly business, our I travel mentioned, in some pickup that curbside segments. also across certainly than a projects. we hardest cases, seeing probably our casual and seeing are our across big mean of represents casual they’re quarter I the flow capital spend some in as not and with Obviously, forth. brands piece dining, and not less insignificant independence hit and we’re so business right? spending,

is, few across and few it quite So again, a segments across a quite lines. product

certainly in was carryout Eating those And service mean, do purchasing going operators mean, still are now. out. look, side are this is and in quickly right here. people and that to we think I on delivery, takeout, eat food turn away. I even by doesn’t stop, means not immediate period, is involved think I things And segments right? are think, other back out going through I And while there certainly there and not the the a no the of shock lot we’re

we’re like been reports. that of had showing kind what seems that seeing So it in in weekly up

customers are right. adapting the and significantly, And that of and confidence industry gives our down we’re again, the kind that so us

but two continue wave or it – here, disruptions. like other will turn to seems So that absent on a slowly

Mig Dobre

Understood. trying Last think question, how if your to of about accounts to receivable. you just I a may color get bit as little

there? quarter bringing aging how the you. down. kind you of a here little about the of you’re Thank in about receivables risks allowances, But made sequentially bit that number of progress thinking You a talk can of

Bryan Mittelman

risks does on on going not a be as expect have collections not our let’s a of say, that we there a highest is to in of little trend be end as may say, and as do are bit we I’m dealers But come risk, was distributors. a do not the current There protection have to month. customers viewed continue surprise the the worsening The some the through to Yes. having And pace that of us. customers environment. DSO.

So it’s I’m our our to is balance we that. the collections down But, list. trajectory AR with wholesale not on levels the the made point come seen any Again, not down, this changes But at very positive. to certainly we’ve right? have going time. revenues So has held, in watch obviously, about again, happy going reserve

will list on watch though. obviously stay it the So

Mig Dobre

Thank you.

Operator

comes question [Jefferies]. next from Your the Saree line of Boroditsky

Saree Boroditsky

Thanks for taking my question.

trends for the positive expect backlog the remainder you the there year? April food the the first, strong how are to see thinking processing, sales about about do Given of described organic you for Can growth you and and order talk sales outlook you continue? that

Bryan Mittelman

see commented, as we I The Yes. to do drastic not there. expect – declines

isn’t I think, organic certainly revenue it guarantee. but a growth could continue,

– backlog, noted, beyond but have had the down. As order what come rate we has Tim strong

Our seeing product, they’re demand type safety their of call transitioning customers for let’s with more their own great foodservice from or to employee product. one a but dealing challenges product a it’s it, whether also retail-oriented are of,

think, to be the level rate to it to same quoted. magnitude would we’ve bold at declines But make that a don’t how order we aggressive are statement, see I that for we had. me too going see So – the the expect growth we certainly, organic of of

Saree Boroditsky

to outlook talk more pipeline, the that well as term smaller mentioned more and then we gain as able you may lower in the if you the be thinking weather players And guys? acquisition think you’ve investments. near not there’ll be the how you’re through opportunities you deferred in clarity release on as as you Thanks. acquisitions Can sales about

Tim FitzGerald

Yes.

a that’s question. So good

a the in like – ideas in us. under into as our feet activities everybody we else disruption always, coming this like Obviously, had year. the visibility to So significant plenty of get is would

to strategic that development the I some invest to us our seen think will our defer obviously particularly, and we expand was lot a those there again it Middleby core better crisis. move initiatives until certainly, ideas year, mean, of over us outlook. technology certain appropriate look, piece for last of was we understanding beyond you’ve so activities, business as And of and have we continue a the had as of acquisition initiatives business with which in and But the are growth the position organic we to

Middleby crisis a everybody at – being how think this. equally fair online a on depending point I mean, as that disruptive said, XX, That’s we you transformational I long-term and think the and our lot we acquisition – I look, on lot ways. this this. as come around such periods the of this back we acquisitions platform. came mean, been like a some time I long we’ve started not most – And acquirer that – was at a So in occurs. during September in And built will of appropriate doing how will

have multiples our as multiples strategy, been of we we years, us, Certainly, up few for up. as over to which climbed has had the very acquisition one the that creeped been challenges committed saw even last

think, I a bit this a mean, be So period. of may resetting I

kind I what So as shut think of core period. off we’ll strategically it’s a of Middleby. continue deferral, opportunistically to go things, through But and not a is a we think, tenant the through it’s of

Saree Boroditsky

Thank helpful color. you. really That’s

Operator

line comes Joel next of from BMO. the Your Tiss question from

Joel Tiss

guys, how’s Hey, it going?

Tim FitzGerald

Good. How are Joel? you,

Joel Tiss

right. All

activities everything that like of pull forward So of some Is strategies to you XXXX? the I hints some disrupted thought not accelerate the is about talk kind just accelerate strategies through you gave integration already to couldn’t right now wonder or rethink there of acquisitions, or of you too, and and things if till doing. that get here to the XXXX the of – kind like it you’ve past little can to opportunities maybe you been us sort the too

Tim FitzGerald

opportunities had again, outlined last on are some some Certainly, executing our the initiatives acquisitions look, what number of to been other number that a the business hatches down eight in kind a on there into we it’s that year. will sales four battening coming in this look of But recent So year. comments, and weeks which those to we other smartly were this wind generally. very relate we’re might which had might company of of here kind early. period – Bryan again, the at into there other the items certainly around We or then synergy be. opportunities

months you. here. it’s a broadly in we’ll But will more things non-answer be So the weeks and that thinking really through to those upcoming be

Joel Tiss

equipment, lot an really that thing, be experts or would be been been a talk that’s seems industry I to going about some around think that for whatever historically a sort had super issue. that throwing of be it And Okay. little But helpful to everybody, hasn’t bit just it would might kind used replace to kitchens than are bit from custom of used equipment a and able the and different area. be a the rip And overhang it one little would casual of designed and harder seems it of be lot think equipment out built like observer a installed. to and just into it

can about about we what wondered, learned you’ve decades should little a the used think just how and equipment bit it? I So about you over talk

Tim FitzGerald

pass and comments Dave. start, I’ll over then this couple you a I made of there. to to – Yes. I’ll

certainly, about XX% So discussion XX%. is likely I shutdown not of period there’s mean, new, used this being equipment restaurant So during more right? to

As there’s you for customers. specification said, a chain usually

to any going of not they’re equipment. So just piece take

cost refurbishing expensive. actually So one. and the is that’s number two, of equipment Number pretty

So new a Hey, not be it and piece to a safety service it that of, work. risk putting difficult. might which and and to you It expensive might got of that might then require just in clean it a parts another hazard. taking the is is fairly moving pretty equipment location up. hey, And call,

wipe of lot a clean is laptop another equipment, kind a operating you customers. our company it's a laptop and like for kind wouldn't for, used from certainly piece and start And it an And equipment say of I'll our of over. buy of

want control. energy more of You greatest latest better kind and got a and that's efficiency the

take it going don't probably is industry. it there I So wave of that's going to will the it's not to impact. a that equipment be be a But there will be more over won't and there that factor think some because be new there have will out probably this and of

Middleby as buy should back even mean, equipment looked we put the market. at, used out we, refurbishing have it, it in I

refurb that would was of – was in conclusion have to a more costly conclusion, this we equipment it piece past. and I done It say the new Our then build equipment.

– usually to well that think just user I needed fundamental again as cost customer. dynamic equipment of that is dynamic very specific the as what is So and there's

don't why Dave, you… So

Joel Tiss

Great. Okay.

David Brewer

an time on Tim's That don't To see operator. for equipment a and it I long internal all. – really add, did time that. I'd ago, generate ran it had wasn't good as wasn't I system point a so will not it it and see don't where threat refurbishing a only a Tim, long Yum! that build I Yes, business as ago, and pieces we profitable, at practical the a of threat. for brands Frankly,

So I don't see any issue at all.

right for it advancing XX We the changes refurbished it markets, future, it, quickly don't piece line burger going a antibacterial chicken even current that to just operation new of past. technology the are technology a are looked obviously cooking practical controllers It a it's in hasn't it will versus around the very trend operate new in in the of be worked isn't But financially watching surfaces to now the The last And surely so out, more or make surfaces. think and equipment. with worked control while closely. it production re-install a it to It at. pull work the frankly. recondition to in years. I hasn't operation

Joel Tiss

Thank great. much. very That's you

Tim FitzGerald

Joel. Thanks,

Operator

from [indiscernible] question next Clement comes of Jamie Advisory. Your from the line

Unidentified Analyst

everybody. morning, Good

Tim FitzGerald

Jamie. morning, Good

Unidentified Analyst

to have been is, over commercial the you store service look the Dave or percentage that whatever openings, between the to your in do would food new that last business international? XX attribute number roughly think would you years, the Tim, what if back if you, you breakdown versus U.S. five of

Tim FitzGerald

too, that start Dave I'll one to this over to add then I'll So on kick and onto it.

clearly the years, you've Russia, where focused periods, markets the internationally, opening parts right? Latin got, store on over Middle we East, such recent last was that America. greater greater installed are the in five base. I has China, been those U.S. the mean as investments a India, new of markets So and clearly it So larger we've emerging that's as markets, made

of is the is markets lower for we percentage been it's and within of the for what that domestic new about build, higher markets think revenue kind international So XX% in. of our

And tends fast right. casual in around locations, to it domestic nontraditional the markets, be

you call builds of likely what that's our of be. in to as who markets store but new greater knows world exposure kind of on the to would they and before So it, the the you move forward, where turn some emerging U.S. might want kind would if bring openings again, will new in

Unidentified Analyst

Okay. Great. Dave, any comments?

David Brewer

about excited actually and I on markets store internationally. I'm what thing. No, with say new the same pretty international been development would the we've exactly especially focused

I equipment just are pay think and perspective, it’s the service a the be both share original equipment, able in dividends for technology sale after itself. next the because in going support and year market market the the from to to after the we system of year then

things internationally. a markets in make those think three new just I force combined us dominant

Unidentified Analyst

much all Thank very time. Appreciate for you your it.

Tim FitzGerald

Jamie. Thanks,

Operator

Seaport. of next from comes Your from question the Walter line Liptak

Walter Liptak

morning, Good Thanks. Hi. guys.

Tim FitzGerald

Hey, Walter.

Walter Liptak

M&A of a M&A wonder there's discussion, you're got stabilize. you one start at the just follow-ups. you point. the at on company versus a I bigger have now to M&A once or that Would I on with prefer do the One things other, if a stock down couple buybacks, this you here, buybacks? view over look still

Tim FitzGerald

in a So quarter, buyback. look, mean, here first we even did the I

and liquidity had So is like until we've which cash it onset, focused on again of rest of the hoped, kind better we're world. flow the we started we pre-COVID obviously certainty, it have a

we thinking are into been buybacks this, had coming we about certainly So thinking about opportunistically.

into of weighed think it walking on I mean look now, the clearly menu right to on I pipeline how hard But that like our in talk terms in view looks positive we look, of long think what but Middleby was perform the I opportunities trades – this the depends opportunistic obviously, So buyback we've kind period. on run. where positive and very approach two, because, a about all somewhat that we being got on the the was out

Walter Liptak

the to the got then China more aftermarket out that about running the wanted China. restaurants parts and and Are of trends up the as get open, from are Okay. world? that recover And in how restaurants play insights again? lessons has rest you ask to started there any to in might the right. All or I service And

Tim FitzGerald

expanding look, So China is – our which being been just a our in piece is a big platform business that general, we focused piece, That into. of relatively overall. it's small said, certainly a Asia, had on market is

the weeks and on we store mentioned are trends is orders opening they eight as in come the A up comments of see kind are plans to original the do the business slow. XX pick customers year year. back traffic execute there behind. plans that our the of were I half through other and So probably to Restaurants coming to it's their lot than hard on, looking did all of turning have that their into

I So, optimism some gives right anything want that into we much us to I too mean, don't think read now. there, but

here we've So seen what seem other following in we've trends China. the in that the to than seen orders, be U.S.

Walter Liptak

Good Thank Great. guys. right. you. All luck Okay.

Tim FitzGerald

Thank you.

Operator

Your next Blair. question comes De Maria William from the line Larry of from

Larry De Maria

morning, everybody. Good thanks. Hi,

Tim FitzGerald

morning. Good

Larry De Maria

Hey couple questions. guys. of A

some some you to of or you're doing potential for order doing guys more be detailed markets you how may are be that But of may lot now actions business more and a different become anything more structurally with to the address permanent. those and may manage of short-term CFS detailed First, closures the permanent. capacity large the in restructuring? Obviously excess

guess. versus even and I some utilization So pre factories – about in talk maybe about thinking you discuss of you're that now just can how crisis, the

Tim FitzGerald

cases it's we're factor So have we are just to, closing down factories So week right? don't we're Larry, orders early. right our I is now, staffs clearly running enough the at would if certainly or off lower or probably mean, too say the days. utilization low for very I some

right? that about it's and And come will drive what certainly, us So the there's we think as And operation weeks lower I make learning But we through I think into trying much our a things efficiency go company, we're six at mean, out greatest again, that help we better capacity. that think, now is right levels. that we're us do we're as I are – it. – in of to

some how do we've because business as what like I around So, a the supply confident business are see gone that lot step operational Dave it's may up that. the what lay we'd certainly may the I out or big not come And we're not back look we like how as to and changes initiatives, going is of we through will particularly understand chain – think, of we out going think worked mean, long on certainly in quickly. to function of to I just it. we has

So add I'll ask to on him to well. that probably as

David Brewer

color little on what I a to our would bit supply-chain of Tim the some side, some management is the only The just bit key lessons we've learned on of us Yes. benefits stepped of color, said helped to that this really our improved and – through reap have costs as the that and obviously I and out have think lowered quality back going we our those this. ramp suppliers up and suppliers they're of add

suppliers, technology them tough in learned them for management equipment of parts us we've credit are giving during our and support. pieces also stepping through clearly times our service in it's lessons of and right? after Our applied some getting The suppliers of being leaning customers, to into customers or getting taking care and them and sales

Leveraging our got lower the suppliers are change quality costs and our supply during for us. thing same here. the leverage initial So across better and going that's chain to customers to not weeks our accelerated doing certain

going is our looking beyond pay customers on how look at the how their we to and and next at are our year year that suppliers. dividends suppliers So

Larry De Maria

are having and And processing, capital. about insulated consumed? getting some those of maybe which decisions But more the et you much let's versus think And in and obviously all? the you about to you it's early we then and Are yet? and portfolio more having is all at discussed be strategic buyback pretty more, And that diversifying thinking thinking agnostic food Thanks. more may into say, way where diversifying about the are we obviously, acquisitions, discussions to larger portfolio deploying guys discussions cetera. potentially

David Brewer

which are service as think, despite So, focused we I on to fundamentally I and now. operation, home is, a continued continued right? our we've the service processing which the expand commercial we've people of and a whether it's right would whether or clearly right? disrupted And Then institutional food home, and lot we're C mean, that the supplying like right? company a market, at becoming food Larry, a based in restaurant, within cooking. a through food food is So, say, to our in very whether food company in retailers really very are technology on we it going commercial, mean, operation, it So through on. store, it's customers restaurants going and eating, I preparing from we're beverage to that's broaden help operation, run and I into a out to service

So service. a broad we very diverse food I say and would have portfolio around

have how from think very well we time, our that but to customers. demonstrated competencies innovation within over we we can I continue core that a to that product understand that very value standpoint and and we deliver broaden

our I a frankly fundamentally, I to to broaden that's place natural So it's foodservice. that mean, kind is that of a – just in is continue DNA think

in behind So but time. over there period quarter a long of not some stability specific that a certainly

that So to will into know naturally that going certain strengths. the well company. that's are very a think that how And synergistic. areas We and fit forward, continue extended core extending extent our we've into I

Larry De Maria

and Thank Okay. you good luck.

David Brewer

you. Thank

Operator

management back our That closing any question is for last today. I'd to turn like the call remarks. over to

Tim FitzGerald

Well, a have so, confident a – of on lot remarks, than think, we a lot Okay. we're covered other I financial the think we've here to what closing I strength the don't to customers, the leverage taking through that of I call. actions continuing period that obviously, the I in and challenging of and we're move care our mean, ensure company. employees, is taken

of support and everybody, employees shareholders. our the appreciate customers, again, So

you on talk joining next we today's to So everybody the and for thank will you quarter. call

Operator

for participating. Ladies today's conference concludes and thank you This gentlemen, call.

You disconnect. now may

The Middleby Corporation (MIDD) 7 May 202020 Q1 Earnings call transcript