MIDD - Earnings call transcript Q1 2022 | The Middleby Corporation

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Operator

Thank you for joining us today for The Middleby Corporation First Quarter 2022 Conference Call. With us today from management are CEO, Tim Fitzgerald; CFO, Bryan Mittelman; Chief Commercial Officer, Steve Spittle; and Chief Technology and Operations Officer, James Pool.

We will begin the call with opening comments then open the lines for questions. Instructions on how to get into the queue will be given at that time. Also, please be aware that a presentation to accompany the earnings announcement is available on the Investor page of middleby.com.

turn over to Tim like I'd the to call Fitzgerald. Now ahead, sir. go Please

Tim Fitzgerald

to unprecedented Great. we everybody our sales while which started our and the in thank the today and war continuing posted progress and profitability, Thank Andrea, to you, production record XXXX increased in a increasingly you Supply the were China strategic related inflationary momentum significant of increasing upon first first quarter, largely the in of facing impacts. and challenging Ukraine. first initiatives. earnings we incoming support we made our chain with execute maintain on quarter Operationally, cost quarter for recent result again become in with for and call. impact our and disruption COVID year we shutdowns impacts We backlog, upon able earnings the revenues. to orders remain building and the financial have the our on us joining as Financially, outpacing focused

make And equipment, affecting effort also to all to partners continue challenges of to daily capacity. strategic efforts availability disruption an with with the facility concerted minimize expansions, operations. face and teams execute to to vendor manufacturing in continue work Our investments in parts in our we people increase production

QX record as year. in placed on improvement our challenges through level the chain we operations. to further additional shipments the have to increased to disruptions progressed While a supply recent are we We continuing and committed

our business long-term for not challenges we profitability segments. losing our and of continue the three operating of related are As forth we goals each set pressures, to sight manage margin

innovations focus in of launched new increasing with mix. continue to profitability R&D and We a invest our sales on product

quarter the of the increases pricing the offset actions recent in realized supply of cost benefit enacted half this should most year. with wave chain the second in already early While second

segments. we XX-days, traffic is the three in and At commercial the underlying moderated become still categories. and the continue generally across our fast-casual trends more conditions while business past market long-term uncertain factors have overall segment, driving our recovery, is to Foodservice While all over the demand see QSR in of industry

in challenges speed to energy, segments address see such our of food to casual and lodging solutions labor, costs. pervasive and of travel customers We invest as service, dining, institutional what and continue increasing are investment residential activities. the dynamics our pressures rising still favorable in market inflationary business market. and with housing to recovery interest has At in present a rates been Other risk

a and additional categories existing starts, the to to continues the and new best offerings as we facing remodels. kitchens of unique increase address segment business, faster challenges their our to and stable greater continue certain home we investments ahead. In supply and food demand challenges evolving need opportunities address capture of full-line labor in and positioned drive our our demand equipment factors robust impacting summary, at sales XXXX segment remain impacts presented continue start The confident we are we challenges, for these if while home The levels. our recent of the they and see spent customers our price weeks, continue rising strong provide chain with favorable of positioning execute. ability Despite driving also growth support to and higher the softened see needs. in are be market to to XXXX solutions, at costs. to markets. trends in continue uncertainty to home and and perform. our strategic ahead new grow, market new with We're automated in new equipment with In capacity, pipeline housing to inflationary to However, of food pre-COVID challenges, time end And continue poised to the continues processing for

technology and recent over continued Now, of some call in our comment I'll to another the slides. to product spotlight James our innovation investor on initiatives pass also highlighted

James Pool

One our The Middleby's One control introduce effort brands, Touch. system new our Thanks, a two-years that customers. to expands Middleby's and Tim. controlled I'm segments, Touch of to combination standardize platform. happy Middleby of is

we strengths several One was continue of the areas the ever singular But as of key we is obvious, do development. when individuality. for many control to to of brands. our Middleby To comes so system a need especially controls, focused brand this on it acquire Middleby

purchase to sale, point ability them the and base, IoT purchases. a customer a of kitchen First, way Gen Gen control open Middleby the equipment to IoT our equipment, kitchen connectivity hassle-free customers thus ready. platform the a additional connect we customers. allows with controllers their One kitchen to to straightforward This wanted on at providing Middleby open and the for lightning-fast our fluid provide future-proof Expanding Touch our are while providing our our X onboard Z to satisfy to environment seamless connectivity, connectivity open also platform equipment

Next, and around our the struggles we labor training. focused experience, which industry the of within the is on given the state timely, user current

Middleby single Our conveyor across TurboChef Middleby works cook Middleby and Firex, the whether all experience user work oven Middleby products, in a oven, rapid Pitco a Marshall a experience user yielded a fryer, that become Taylor a One for CTX, a name Once Touch forever uses a Touch user control, a a Middleby they will customer few. to any One power product. machine a soft serve

by utilize one also independent issue. utilizing a issue also two a importantly on the little effort rely chip reducing two across Touch products; a while MCU today's controls. supply these of amount different focused one ability chain to providing chips, very three the most that interaction. -- a on essentially environment, arise controllers produced being chain. for simple modest us or unique alternate while only different One This the One with manufacturers. affords Each designs controls should three due of manufacturing shortage require to effort control of mid-touch high-touch products; and supply The high-use SKUs number and in for products to high-use brands for Lastly

control and the from strategy of new one for one control, goal user customers. was and one experience, our having born our learning curve Our products

[inter the XX Touch One by But Synesso it ratio] later products debuting we the one Brian, mention kick of month at and Middleby machine, a give have like be espresso ESXX. before the this live I going our new end to over The will new We platforms I strong and XXXX. approximately to old will also (ph) would to group

elegant known While designed espresso best of for and and this on built-for-the-home use. Synesso was our machines first most is some market, the and commercial building the machine

stuff. extraction, it adjust react the Synesso's this multiple blends pre-infusion, will brewing engineering post the ESXX which your to the or machine flawless on get Touch use, a to is intensity life the If why being quickly full that technology to feature acidity, the Synesso's breed The brewing these commercial bitterness. espresso multiple signature adapts of happens ESXX process This is screen data, in desirable in multi-use dial the demand to stability ideal and brings own, temperature realize used most of you and home. to to trusted control balance see graphical on machines work that espresso ever One stages approach, making plus built, opportunity between incorporates to yield you how brewing users sweetness, quickly Middleby and allows infusion. understand combining to digitally The flavor,

enthusiast those and our platform the Thank equipment. to excited residential We our and for and this add Synesso to seeking to you, best over are Bryan. espresso you,

Bryan Mittelman

Thanks, James.

at which reflects XX%, other XX% release adjusted year quarter, revenue to per nearly EPS, GAAP million. an in growth basis. reconciliation we share generated and with of of pension over and was back the compared the $X.XX, the earnings grew XX% million revenues noted again results items EBITDA were For prior million of or Adjusted as record non-operating X% Year-over-year income, organically. expense, our $XXX excludes well adjusted $XXX EBITDA the over or press of on $X.XX. as organic $XXX amortization over

any Our nearly note excluding the over this the basis FX well, EBITDA XX% late discuss revenue of organically margin grill I The year. outdoor just as of of margin was and acquisitions December adjusted Commercial globally In EBITDA the organic are impacts. prior saw that the residential, margin The on over versus up was all margin will revenues. XX%, organic adjusted an companies. were, was XX% foodservice revenues excludes XX% XXXX. Please XX%. meaning, acquisitions we growth nearly values

impacts This Across XX.X%. please turn a supply reported operations production inflationary X.X%, As food impacts factors well from affect to in income processing, the In to accounting from as in purchased segment. a inventory the our is the of our margin margin additional points. the results, continue adjusted COVID, organic higher key reviewing as impacted company, Also, our EBITDA operating adjusted chain At margin quarter. lower this keep These and EBITDA by was in accounting have increased all produce efficiency. our million and acquired which excluded are reported for negatively $XX however, revenues gross levels. ability valuing margins of face mind over we than businesses you hinder and few the challenges, at the acquired and metrics. remainder nuance, profile impacted time, the

challenges food these in For processing the dramatically the affected margins past most quarter, segment.

Overall, from are have environment business to supply it influencing the generally seeking operations in higher QX. we receivable. flows costs, control first while working Cash market year. the acquired addressing levels being flows working as strong Even well as AR. manage residential to product over have results volatility million impacted flows capital as aggressively is levels, especially cash the the two-thirds As we demand expected to capital about hurdles. working commercial. generating by contributes accounts in million. rising current many chain capital to very our operating where earlier cash costs rather businesses as remainder conditions, improve experienced, results including The and Also, negatively with positive positive delivering relates used seasonality changes through and recently these inventory and were we inventory levels, increases Increasing we $XXX sales for are mix by $XX we generating over in successfully facing from the quarter some in also anticipate

Our total ratio X in leverage came just times. over at

billion to figures actions We have over over past of for quarters. $XXX capital $X expanded and share-related million continue over capacity. These after are borrowing two the having

transactions. market buybacks open over the $XXX During quarter used first stock we for million in alone,

took long-term These no obstacles As developing why superhuman our portals it I it Or I appear most are our would tackling Middleby pride Is their drive I achieve environment appear madness else Seemingly, felt with we is and endless outlook, satisfaction teams well to done? we while pizza. Or a was diverse all reflect our mentoring offering and do relief culinary in times from as the great join the these want After generate people? to on to And in. was goals. of factory. of and be take job time eagerly for to to to found abilities -- any strange for to reasons, operating for that demonstrate evaluated continue for tested job our success? the challenge? Or strong we why glory, the help it why and our the I promise about done did did an the resilience to investors? about why a oven fight me, universe of some customer develop but all, free not it returns

impressed and familiar I've with to become amazing about and few Chef the conveyorise last use to past opportunity and output. until week's Andrew taught importantly self-cleaning is besides other automated Cinco though the most much environmentally Mayo Well, friendly? solutions, on the has about learn can the me it that pizza is Over at also years, celebration. I platform, electricity. truly cooking products to getting great wasn't easy CTX had de taste run

the put follow endlessly. spread to hard media, together about is it Andrew not you us on which If seen ramble on you've for Chef me social that

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the still By and you it While buds musical some, it any like Chefs here of the makes may school, will lot our pizza, to the make I Tacos. enjoy me to for sight. my came out more too pizza how preferences I'm but it CTX a the for takes see way, two than old staying work dance, taste my with be let's of

details. near-term take been So, share where been our orders discontinuing that remind for stating orders levels have had disclosure prior Nonetheless, to backlog the seen us? to tasty I will they and outlook, we quarters did quickly our what our calls, As all as in during continues when QX similar will have grow note overall continue I are I the Accordingly, we we grow. of you these generally XXXX. we to -- that treats recent past compared

However, slowing occurred so, levels. orders more exceed overhang XXXX and in and do of recently. economic with geopolitical the we well XXXX some the Even many has order continuing trends anticipate risks, to

in record soft, For which entirely the a food a did is start orders processing, had typical not while year this little for we QX. segment, admittedly

most price will have set In the in improving a cost half year. revenues XXXX as XXXX. be back be stage as meaningful will face expect situation the I'd half COVID notable into QX. near-term, as with compared a the the China. before for continue Supply higher to which in bigger especially QX, margin, challenges at to fulfilled revenues and headwind our QX headwinds generate the solid large impact chain in obtain a back orders and helps on Residential likely QX, QX will to well. We for EBITDA will volumes This look of the some of we likely

current above risks year economic of While year. a half remain. more portfolio, pressures that meaningful market being backlog, before factors to will committed outlook expansion our plans, offer levels large half will benefit we the and robust food demand well numerous we Customers Commercial we indicate optimistic are remains remain overall. service back dynamics the our have but back adopted, social demand solutions improvements with for from a pre-COVID can in do price the the and see of leading positive cost the and to Across in near-term meaningful remain persist. positive persist

infrastructure. taking As improvements made, capital our efforts Putting investments Net represent are the overcoming highest expenditures such, the price cost we together, our negative all continue have the to for operational in and this ongoing. six actions are months and invest integration we past the we company compared our scenario basis, the ups overall QX, be a and there of Looking I for half back bode will well and XXXX but with at QX On as results some across the segments, into XXXX. that fairly will to total QX. be suspect downs consistent

business demonstrated For strong have and in successful a times. turbulent that years, we we experienced have resilient business and and an team been model, management capable has a that

for please. questions. half that, and Andrew, up look poised with can beyond. greater the you second are your you. in line, we We the And success and Thank forward to open continued

Operator

Instructions] [Operator Thank from Mirc you. first Our comes Dobre from question Baird.

Mirc Dobre

everyone, morning, I Good at Yes. also Tuesdays. talk appreciate

I'm Bryan, that things thanks looking clarify -- Maybe to bit commentary. little a for So, maybe

Bryan Mittelman

Yes.

Mirc Dobre

QX talk they then were to and that personally heard kind heard QX. being But about with I margin revenue line of to in better you sequentially going relative be things QX. of kind I conflicting QX two maybe

So, which is it?

Bryan Mittelman

for a consolidated in QX, Food gets be company as Total better, comment will right? bit them kind likely add -- QX similar well, results. bit right? Yes. challenged, little line, And my to a it overall It's up, so residential of little yes, of and, to commercial better Processing,

Mirc Dobre

Consolidated results.

has course, occurred. And Okay, that that's then helpful. you some of highlighted slowing

helpful? Maybe context would So, have lines segments that there that additional anything were can might helpful. mention really the product you this there happened would be geographies be

Tim Fitzgerald

Yes.

kind obvious think I but one, only the which given region been some affected of also that's terms some of supply had that China, that's terms orders in an not chain, as expect effect. is market is of in might of in So, you lockdowns,

of as the you have impact residential, we obviously I recent think mentioned, the look lot that still Bryan one the is we've disruption seen, And remain. a on more been in across phenomenon this segments, as the has market. more is

evolve, bit, there XXXX. slowed ahead as So, a how we'll it things remains of but see have things even

that's to that, well, those to extent. there call some the So in a as but to related disruption areas is probably Europe Obviously, out. lesser

Mirc Dobre

Understood.

acquisitions the as side, late made were there think initially your from On revenue than some acquisitions and The has we grown of well. I in was residential modeling. residential business contribution, higher you've

How AGA, here inventories to -- likes guess would the portion and I'm Or that define then core kind bit see something defining what channel? in on question to I talk business, dynamics? in those you console a a that are the And presuming is it from how So, like the Is is be in of -- that Viking, of of a my of Joe stores? of of of such. the slow kind seen question do assess the standpoint, slowdown, full your you've an and it you -- stock happens I of Char-Griller you're the on. but in the market inventory Normally seasonal increase second and part QX. about that? Kamado to of that terms sort From you so kind else using

Tim Fitzgerald

had and kind half. and of guess, recent just the But to over I handful a significant of activity Well, year we've weeks ahead we're the slowing, XXXX. obviously, last going talk last growth of the again over order about

XXXX. the our ability large think right operations. about year still we’re comments seeing off, Certainly, across been, think pretty continue we make investing we've that we up will as hence that that I but haven't have in mean, catching to the catch all be lot the in had ahead to of through which now, Like, to so up to inventory a residential, backlog, our not true. backlog we move we're We is I channel, little right? I that's right? There much segments, come true of in So, bit much is again the

gone You handful we've over see our last can equipment expanding of et CapEx production, cetera. quarters in invested and as fabrication has the really up really

seasonal, a on grill a have brands little geographies. a companies, build is the bit On it's for there the depending season. grill But typically, different across you

a haven't because QX. second of fourth quarter, which I forward, look just quarter to -- early I'll typically So, of quarter because into largely platform, residential some the bit product you bit quarter we tend a in we we affect world and getting that than heavier mean, shipped new mention be will U.S.-based as as the the more is into the we're fair there, first in in I'll of parts first more the grill in and the changed say broader the of starts manufacturing, going obviously, the kind left quarter. in business, China localized that companies but so. those there get

a of would grill been the think headline be second new standpoint from the quarter, shutdowns effected those production likely have into you as more production kind news. going mix and companies with So, given that recent about

course, acquisitions, about how but first But to Of things off said that margins, we XX% were to like on year. I the EBITDA progressed point the quarter. overall start started those quarter out, we to Middleby the would depends were as under businesses with the through dilutive the Bryan for for

journey mentioned early about the well EBITDA years. the as say that the felt in how platform margins got So, we mean I we've the XX% be we over growth feel quarter. the brought we And very and innovation I'll have to next posted here, kind in we continue that strategy but about about think platform on, investing despite market, opportunities, that as multi-year the disruption I to -- the first excited to three mean, good I of targets

Mirc Dobre

chart that the Slide Okay, understood. put on revenue a there morning question, by got one requirement. out may eight, final demand you've talking about on this If I Slides pie you

Thank is really that than as replacement some to in of which about much your as curious said I still you. one relative interesting, to or is has context are here the more 'XX? as point pre-COVID why was case, sort I'm get you here, and and For that replacement more what thought 'XX lagged we're down you the of or why you think XX% XXXX? of is in of from business and has, upgrade, it implications to thinking down

Steve Spittle

Mirc, Yes, it's morning, good Steve.

would because So, I have. increased as bit more much as down little a think it just, builds have much I the read being a into maybe as of -- just they replacement take. of new Not different it's

QSR for strong. last So, such pretty new-build over having segment driven XX-months not that's year year. they the gas you we this still the to into with yes, shared and year. next you're six saw going last plans us primarily off foot by that aggressive What taken They the have the

of you on new build I I to chains feedback this a it's I period replacement cycle seeing next focus much the XXXX. think QSRs that it's probably replacements next I year again based again and through on we're builds. function think we get think the get the last, emphasis. new a up new away. into that think I on the XX-months, So, we're shifting the XX of see think we Not more just from as back bigger in, as hey, do still once pick in build

how that's about breakdown the pie change would in I So, from XXXX. the the chart and think

Mirc Dobre

Yes. you. Very helpful, thank

Operator

next Our JPMorgan. from comes with Zakaria Tami question

Tami Zakaria

good Thank Hi, my much taking for you questions. morning. so

back next expecting to first improve half from you of question my and results I into the year. year mentioned think So, this is, you're

Just the segment, in EBITDA you as in line both go the wanted to top sequential clarify, back do improvement margins and into you half? each expect

Tim Fitzgerald

influence. actions, Given we mean, and the risk that and those us then I that really remains it, the for then simple will improve we're availability is that on Yes. waiting chain input pricing should to pick becomes backlogs, up take our given the right? right supply that tailwind up sets and on improvements, see

Tami Zakaria

so can increase you Did comment Thank -- have is quarter throughout trend price orders much. other how a -- impact And meaningful I took any April. And the orders? my in you it. segment? on that think effect did question you Got by pre-buy

Tim Fitzgerald

early beginning year, a into as -- seen where bit. of we're think I April pretty bit. it I This a by period, outlook a because we've we terms that of is have for from of price pretty the but some mean moved to we've kind been pricing, like -- the just quarter, we've trends a The slow while. the haven't that solid quite kind the that's gave the not we they dynamics in I the as we we anybody, QX, are, surprising say war, changed went of continued issues in right as March. don't moving quick through out posted overall have -- inflationary in cost April think the bit. saw made as throughout mentioned, the to those us continue we orders -- we affect would of in away we're incremental we given of think pretty well increases I I mean, segment, at what I entered we of started increase A think here. a base. mean, from we've responses our the double-digit of order as think some we supply I really had mean, were I saw start that, China, I I lot comments but in to impacts obviously, impacts we coming

and and the April We were increase So, a kind that new was in to incremental price year. implementing of already.

was we've beginning in quickly that we that price things the the the took originally larger done of April of and is increases one than price anticipating. those capture So, increase very significantly we

mean, margins we QX addressed two the let's now I experienced that of that with of at those are So, we've of our certainly quarter what in -- an what kind point for significant given so capture that But taken expand. price the the year things kind of didn't recent kind of expecting increases where wave say, have perspective beginning a increases of bit increases, we've to given to cost start been. that we the we've want a I already drivers just we a inflection the have saw pushes a of anticipate think new I we we to backlog, increases set were would for here. little to confident but another, lot price got we've see which far of

of into kind that you on here bakes margin. that comments So, the

expanding story remains margins. we the So, of are

kind our inflationary heads. but mix costs, are as also half capture to a the So, expand and is for as investments right, our our in sales the R&D pricing back to That of well intact that our the expectations story the year. little hence in margins of operational actions drawing we're to products evolving bit issues, making margins operational the push which

Tami Zakaria

Got it. one, If have price other I squeeze for can do the quick planned in increases of one rest any the year? you

Bryan Mittelman

the we Tami, as to as dynamic ongoing pressures marketplace pricing, our at right the nothing to the with we currently. back for have see market, continue is monitor we and to of planned cost overall we But of if the planned now, on back half point, additional year. will. of side, certainly just the But go this there's nothing

Tami Zakaria

much. so you Thank it. Got

Tim Fitzgerald

you. Thank

Operator

comes question with Saree from Jefferies. Boroditsky next Our

Saree Boroditsky

my Thanks for questions. taking

on staying the price just So, topic.

headwinds the more consumers you second the Particularly the see Given cost you about for other in price segments? your residential's to challenges the just inflation versus in could if price across the talk to segments? quarter, ability expected pricing

Tim Fitzgerald

segment I our customers portfolio resilient, think I and kind that just market, at the far is ability sensitive part thus point let's to the leadership more bit that of mean, little market. I a demographic, has that that say is shown the to price pricing been on. to but we've the been one each able think not of in be market I probably end bit residential to in mean, pass those certainly, out We've costs play all more there also a of little has the only housing most the -- taken I three. but and we we the sticky are I action premium cover mean

Saree Boroditsky

years? of as large then of categories just projects you less investment some as and has talk that remainder the then you I recent And think the those Food as been hot of the projects. on year And believe Could XXXX? Processing, there dogs about those we in Great. such driving protein cadence in into highlighted about what's demand

Tim Fitzgerald

I going a are products moment, I a and lot a to go producers we the at dogs do -- this think about but see mean, lot talked take of and equipment proteins. we No, half as escaping plans. actually the other -- of of can again have projects variety a So, these lot meats, trends it's things beyond at of next are large and over some expansion hot said investment that's that of number right? why have that, projects half there's a Yes. generally I've me really those they than a year protein more done. And good We build impact look of investment back you front our alternative driving items in cured of even get that are more year might year, customers them on. will

things XX, very come large backlog processing projects certain and sit months. food in and in of orders our XX the quickly out backlog others nine, again the for can So, and six, like

Saree Boroditsky

the more I appreciate some the talk of one M&A in from recently? color. pick-up pipeline? just for if about seen And you've a then these competition one the And assets could last me, you

Tim Fitzgerald

say first can I acquisition will So, of see additional, the for one obviously, line be of of and even it's the the time, quarter would hallmarks Middleby a posted add-ons. of in a in couple slide I think you doing long of technology product

we'll themes strong, anticipate acquisitions. to and continue ideas remains pipeline another competition have time with been the of and lots we acquisitions have always broaden for I over portfolio we different we the that mean busy has strategic So, that year pursue there. certainly as

kind high on, it flows. certainly, ebbs I strategic those. of rate So, there bringing I we is assets think are focused we've typically of a that when and But very hit had mean,

to would have continue as historically. I so, us expect And done we

Saree Boroditsky

Great. for today. your time Thanks

Operator

KeyBanc from Our Instructions] next [Operator Hammond Jeff with question Capital. comes

Jeff Hammond

good Hey, morning.

Tim Fitzgerald

Good Jeff. morning,

Jeff Hammond

wondering, foodservice, organic just I'm XX% commercial on can us volume? sense was How much Just a was if much of you price? How the give that quarter. in

Bryan Mittelman

We break Jeff. out don't that specifically,

Jeff Hammond

two I go you're I And Okay. you guess pushing guess forward, price. more levers. there's One, as

component think kicks but of the assuming capacity Obviously, huge kind higher, price you backlog. I'm adds. So, adds, that of people this as just

sequentially about think should we in business? how Commercial Just Foodservice volume the

James Pool

volume constrained by -- I of And somewhat Yes, a availability. said, in we I components, been variety the sight? as short think its we're product have term,

more those time the improve, certainly There meaningfully -- is lot volumes take be will speculation a of and up So, on right? some eager are to are for we our things a of stepping controls problems doing day, old across alleviate in our each divisions chips. of landing will things and come to chain to up. address the nonetheless supply we're The with folks variety backlogs that

been So, there. up have And we modestly. still the a ways have go I'd volumes to say, obviously

Jeff Hammond

Okay. then ahead. go -- And in

Tim Fitzgerald

Hey, Yes. Jeff.

kind of just I So, remind.

we third mean quarter. see started in I of the back kind So, to inflation

that, we smallest timeframe, the have the of more saw QX. obviously increase increases this of benefits about say of cost So, and I a to the price kind China, some frame February year. originally say lot initial That from the up stepped through up November we a coming in to it may one which cost and in we in probably meaningful that will in which the taken, we've took pick took April that August. increase beginning at was the we would a And that probably increases then which time war a of but the COVID, that's flow talked of now of January, impacts. and capturing lot let's one price December, We more took was we start seen just

in, the So, the that back will of come year. say let's half

reminding pricing. of sequence you kind relative just I'm to the So,

benefits the up taken of that even some we've last shown year pricing not So, yet. is of

second So, that -- will the quarter. start And in

Jeff Hammond

Okay.

Tim Fitzgerald

going more getting up you're And a put the what's dealing you're need think do line. day, on then two things of every to kind tremendous down out the categories. affects little teams door our in One just maybe which And production. going job you it just to have mean bit with color I disruption hold we a shipments, which

a So, that the our that could certain -- which uncertainties we those of production, certain electronic are we are let's say, is there some lot Then ship control, kind key all of get components. components the up kind right? key pop if just component more of other be a -- can more Like may limiting -- time.

a suppliers production to as with wide been we've yes. have increase so, So, variety And them well, working of their right?

on to allow of year us some that So, half our the will that hence some the and in start is, factories. the of the will increase expectation in turn throughput back to of

businesses the underway we've uncertainty work work have those of and are closely investments hard they're lot proper and make while our a that's done, we mean lot with their that I a sure say I of well. where making we that but think for Now, efforts as been the lot of being a that's -- with a suppliers strategic in that

Jeff Hammond

in of kind Kitchen isolated to -- chain a that is Residential that? more is of then chain supply revenue or demand to broad And and that more XQ, that related function China some than in is through? And Kitchen the flows there Residential weakness or the issues in purely COVID weaker of supply Okay.

Tim Fitzgerald

half you demand strong pre-COVID the that really demand I well know levels. in and shouldn't the was used strong what, we It's still first of we are really, amazingly have None of again, last still demand. is word. very year. demand strong. residential mean, above just had And I the the Yes. weakness just Again,

year. next of half first The

use So, I'm not to it supply has of of dramatic It impact word. China. China, -- some volume but going our the chain is to coming the get certainly are out And in for rest W Residential, it businesses the terms yes is more of But out impacts of overall ability in a segment. limiting that then, on that across

Jeff Hammond

thanks so Okay, much.

Tim Fitzgerald

Yes.

Operator

from question William Larry next comes from Maria Blair. Our De

Larry De Maria

in up orders residential we current to and quarter including orders volume orders a We've both specifics, lot as and about is or since or flip orders? but in maybe start second May, thanks, morning. without obviously relates for orders talked stuff at it Hi, closed April the to volume good price quarter see and these into first

Tim Fitzgerald

I just to think periods? compared As what Because -- I

Larry De Maria

up Year-over-year they as said. in year-over-year orders, guys growth you organic are

Tim Fitzgerald

Yes.

Larry De Maria

that how high-level I is softening? which curious a is if I'm let's price or But volume much understand continue you volume contribute to is, of versus say, that volume from

Tim Fitzgerald

overall No. softening. that think We the volume is don't

Larry De Maria

-- that's And fair

Tim Fitzgerald

into -- mean going last by we're versus away to get I orders yes, we think said from. we're segment don't moving It's I year, what right? That's

James Pool

a Bryan’s remains is ahead residential you But last still year prior well I very it but of softening, from half relative take can of XXXX. that strong think first comment volume to

Larry De Maria

And XXXX?

Tim Fitzgerald

so is he saying. what I Level, effectively mean that's

Larry De Maria

the bit usually to price EBITDA, where help bigger. second And half your then et be But you pressure -- have second split maybe it the to understand Could meaningful than little much guys be to first half, Okay, just sales is second fine. better you is split for and is half it half us know we Is on first cost average more and going second maybe that half you now a price and increases going more the cetera. with half if back? go the split

James Pool

and clearly, terms backlog So, first through of revenue historical second never the and the before, we have this we any where a half better half, it living and and can think in periods in we times it margins. don't now. I have we than we to where year of are is been situation unprecedented demand again both think profitability compare have

been. higher the outlook again, So, ever is are they've levels Demand than right. great,

But next is that back comparing and market in the going so, and of year apples periods of to to I after have now fundamentals a that the the what of backlog We or are year and half to we're and are overall dynamics year and it the year the really be. prior again, lot the forward look such oranges.

Tim Fitzgerald

through the maybe and think is the last -- right all hence, mean forecast, that point, already very just pricing more all we're we've a Larry, all about bit the on it little the all the three have benefit, taken gotten to not years, all not inflation. like the we've as line has of haven't the to we margins. right, we as but your QX, increase as much the simplistically really now, So, I cost and we've now, right, experienced got wave price got got again, not not you pushed we've kind you haven't holding but go just that we kind cost fundamentally largely we of running the and right? this last of had

operating that margins I of continuum mean the initiatives the we that kind the this strategic benefit had supply So, and in And to we're couple over of think I at I we but years, of think the benefit hill. other get some that's side of of on next is been the chain. the that the where still that executing holding of

Larry De Maria

Okay, thank you very much.

James Pool

Okay. Thank you.

Operator

Mik from question with Our Dobre [Operator next Baird. Instructions] comes

Mik Dobre

Hey, taking thanks for follow-up. the

one quick a Just here.

cash your quarter, negative. of was So, use operating interesting sort flow of in cash the

calls, $XXX we million stock, you right? bought understand repurchased of I nearly and also gone then cap you but of think million that, you've and $XX

Tim Fitzgerald

Yes.

Mik Dobre

Taking color For forward share is, from the going looking leverage your fact maybe of you account guess I thinking your how M&A stands? your terms also about in where where I'm kind of some that And repurchases converts. pipeline the but guys for you're right, into purchase? mean given And what's cap near converts. dilution back the pulled is pulling has where stock cap the stock call thinking the the mean, the I we'd the the point about that from back call then further it's be behind nowhere I additional today. reason

Tim Fitzgerald

call the obtain it a Well, the is outlook to positive. Obviously, to more and use I'll we've until the much rating. than repurchase call And cap way have dilution our mature, stock is risk X.X very converts address cap fortunately, call. and to committed years really we still just leverage share

well. I think be again priority but recent at as the at steered mind levels to continues I'd consider share your the if as obviously additional the we've us we to still committed activity that notes, potential purchases, at risk away from M&A seeking as have haven't very, convertible to from will to along address leverage prudent buyback we look M&A, looked expect obviously, way, point, really dilution for kept in a And as we be all. the is to us very and

Mik Dobre

But sorry to but you -- press on this,

James Pool

No, ahead. go Yes.

Mik Dobre

the fashion we're in to step-in in of is meaningful near-term that the terms seeing kind more of buybacks QX given disruptions investors one-off? expect volatility more a or in you Should of your

Tim Fitzgerald

QX, more I'm is of what? sorry, a

James Pool

terms in of -- One-off

Mik Dobre

More of of a terms the in one-off buybacks.

Tim Fitzgerald

in of capped the encapsulate maybe some think I again, said have tied and mean we we think, that we have what things we I that way that sure wanted right. convert very mean when we occurred Bryan again the that into the was to thought much I very And of say that market Yes, convert the effect took but I'd overall I outlook. the call, action cost to have to dilutive were made just prior our start but was its the matures. not stock positive that minimizing it that, make

So, to share some it think But I but say tied I here, we've repurchases. do very done that. we're is to going historically to much mean going we're not

from call opportunistic basis. separate on cap So, the an

going challenges perspective, to company going the but I some of now we're But believe I'm is all near-term rule next from where -- despite the outlook several through, say headed, very So, and certainly, we're initiatives we've confident in we these working years. got the into that strategic quarter wouldn't we right going not out. a to we're do a where positive

So, with will consider pullbacks stock, to be are time still that, we opportunistic there from in the time. to when

Mik Dobre

All right. Understood. Thank you.

Operator

with Our next John question BMO. comes from Joyner

John Joyner

you Hey, my for taking thank questions.

sales slightly are EBITDA mean about how residential better, are worse forecast comments the to similar to So, XQ assuming you for be better guess level? can mentioned again with the being dollars go residential? and we and referring and you I back on much worse XQ? to processing, to commercial I maybe And or you segment

Bryan Mittelman

right right clarify, So, that The do our heard us. timeframe about I much are know a outlook, to just note the it short to will commercial on product lockdowns business up, granularity hopefully that having challenged. get to residential believe is but the want that QX have to we impact into food of you I relatively that similar processing more QX I significant phenomenon. China a overall available And to be portions total right. comments, right. don't up, consolidated company And

you we're bit let right we've but ops magnitude let in a there that the maybe sequentially comment I'll I the able modeling little are one little take need some the mean now, so hopefully other how bit. to of to a Now, down be size, offset much you put kind huge jumps, able swings I your not to would on two's do about of talked to

John Joyner

large are but being that Okay, Thank then protein processing, projects, that And by affected margins -- I drags believe margins generally highlight the higher for I the Bryan. you with acquisitions not carry mean right. good you, margins. from all which business and the

Bryan Mittelman

Yes.

John Joyner

from And not profitability the good hot into dogs. that structural back getting it's would mid-XX's? Is to processing it's I something just EBITDA there guess prevent that know

Bryan Mittelman

I that mean, I though Where obviously, the no, use had segment. I in even the is about word margins business, are certainly had mean right? tone disappointed goal, we soft and a that that's, the modest more we industry-leading

noting for that. thanks So,

long is February. seems a business digit first but in ago you the that two. on The where workforce wasn't on projects like on COVID, issues, It employees back time right? it impact and let's absenteeism a But forget do works large where have January and not the

and while QX, than we of impacts again operating we the admittedly cost that even at appreciate of lower coverage in what we is to where happen. The for to of COVID, came take and do better also remainder So, where for levels, how some standards great is fixed that to when large again much projects time be steel and Middleby it expect the start means then could wasn't the noting you bend together, put year. good,

these projects sudden, should all be. and could of jump delivering I year we to see as to revenues like in of of believe and into QX. start comfortable 'XX, why you going and not in the a you're the it's what as So, the on agreeing the feel huge into outlook half back margins get But we more is

John Joyner

thank right, then maybe just And one you. more. All

that you international On was segment? available businesses what commercial the the the with -- organic Do for and I domestic for the have growth? guess

Bryan Mittelman

in I think and of I America do. North XX% outside It America. North was X%

John Joyner

Okay, excellent. Thank you.

currency side, any on I I for And guess international for effects the feel so some any have good do of markets for targeted around countries give can of the guess year? you color international for peace? this a like the maybe the And the you

Bryan Mittelman

commentary strengthening. to specifically kind effects. have and I dollar don't is the specific offer there. Obviously, don't But forecast model currency sorry, of I'm We

John Joyner

we're markets like Any -- -- Okay. color international specific any the that side on around

Bryan Mittelman

Yes.

John Joyner

or out jump Like not?

Bryan Mittelman

is good certainly cliff. that's right I favorite little lot thing European been on impact words falling Obviously, a in of not economy off there guess with a modest. proven Europe going I mean, say is, the obviously, China has the is been I bit, of more the weak has bit it using war what concerns would a be for about the the a to little with consumers have resilient. our one right us.

we're direction. So, -- It positive moved hasn't seeing the there, negative still positivity right? in some

John Joyner

much. Thank Excellent. Okay, you very

Bryan Mittelman

bet. You

Operator

closing have turn for time the management it I'd like to all questions. back for we That's over to remarks.

Tim Fitzgerald

now. just everybody and like reiterate the us joining the business we on for Well, call very today. optimistic And thank we're about to that excited right just

to talking execute bit So, supply all with obviously chain route the we've despite lot the Certainly, in that spent of this time that call. are market, on challenges we continue a a initiatives fair about long-term of we going new which long run are the innovation, allow to very are in us margins to products, on and intact. to expand business drive confident our

everybody's call look you appreciate and to I we but next the speaking So, participation to quarter. in forward

Operator

conference This concludes participating. today's for call. you Thank

now may disconnect. You

The Middleby Corporation (MIDD) 11 May 222022 Q1 Earnings call transcript