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Middleby Corp. Reports 3Q Results
Nov 9, 2007
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The Middleby Corp. reported record net sales and earnings for the third quarter ended Sept. 29, 2007. Net earnings for the third quarter were US$14,056,000 or $0.83 per share on net sales of $135,996,000 as compared to the prior year third quarter net earnings of $12,177,000 or $0.74 per share on net sales of $103,239,000. Net earnings for the nine months ended Sept. 29, 2007 were $37,358,000 or $2.22 per share on net sales of $354,939,000 as compared to net earnings of $31,318,000 or $1.90 per share on net sales of $304,837,000 in the prior year first nine months.

The company completed acquisitions of MP Equipment in 2007 for $17.0 million and Wells Bloomfield on Aug. 3, 2007 for $28.4 million. The impact of the acquisitions is reflected in the operating results for the third quarter of 2007. Additionally, the company acquired Jade Range and Carter Hoffmann in the second quarter of 2007.

On July 30, 2007 the company announced an end to a work stoppage that occurred at the Elgin, IL, U.S. conveyor oven production facility. The work stoppage began on May 17, 2007 after the unionized workforce failed to ratify a final contract proposal of its expired collective bargaining agreement. The company entered into a new five-year collective bargaining agreement with the unionized workforce at this facility which extends through July, 2012.

Earnings per share increased 12.2% to $0.83 from $0.74 despite the adverse impact of the work stoppage at the Elgin, Illinois facility and the significant increase in the cost of steel during the first nine months of 2007. The third quarter results included a one-time pre-tax charge of $0.9 million associated with a workforce reduction at the Elgin production facility, which reduced diluted earnings per share by $0.03. Current year acquisitions did not materially impact earnings per share.

Net sales rose 31.7% in the third quarter. The net sales increase reflects the impact of the Houno, Jade Range, Carter-Hoffmann, MP Equipment, and Wells Bloomfield acquisitions, which accounted for 25.8% of the sales growth in the third quarter. Excluding the impact of acquisitions, sales grew organically 5.9% and were comprised of an 8.3% increase in commercial foodservice equipment sales, offset in part by a 7.6% reduction in sales at the food processing equipment group, which was acquired in December 2005.

Sales of commercial foodservice equipment, which rose 8.3%, were adversely impacted by the work stoppage at the Elgin, Illinois facility. The work stoppage resulted in reduced sales at this production facility, which were $2.7 million lower than the prior year third quarter. Organic sales of commercial foodservice equipment, excluding the impact of lower sales at the Elgin facility affected by the work stoppage, rose 14.4% during the quarter reflecting continued success of new product introductions and growth in sales with restaurant chains.

Sales of food processing equipment, which declined by 7.6%, were adversely affected by the impact of acquisition integration initiatives put in place in an effort to increase profit margins, including increased controls over contract pricing and product line rationalization. The initiatives contributed to a significant increase in profitability at this business unit.

Operating income increased by 20.9% to $25,424,000. The increase in operating profits reflects gains in both the commercial foodservice and food processing equipment businesses, offset by a reduction in operating income at the Elgin, Illinois facility resulting from the work stoppage. Additionally, current year acquisitions contributed $1.8 million to operating income during the third quarter.

 

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