ELGIN, Ill. -- (Business Wire)
The Middleby Corporation (NASDAQ: MIDD), a leading worldwide
manufacturer of equipment for the commercial foodservice, food
processing, and residential kitchen industries, today reported net sales
and earnings for the fourth quarter and full fiscal year ended December
30, 2017. Net earnings for the fourth quarter were $75,186,000 or $1.35
diluted earnings per share on net sales of $632,859,000 as compared to
the prior year fourth quarter net earnings of $80,936,000 or $1.41
diluted earnings per share on net sales of $596,817,000. Net earnings
for the fiscal year ended December 30, 2017 were $298,128,000 or $5.26
diluted earnings per share on net sales of $2,335,542,000 as compared to
net earnings of $284,216,000 or $4.98 diluted earnings per share on net
sales of $2,267,852,000 in the prior year.
2017 Fourth Quarter and Full Year Financial
Highlights
-
Net sales increased 6.0% in the fourth quarter and 3.0% for the full
fiscal year of 2017 over the comparative prior year periods. Sales
related to recent acquisitions added 10.0% in the fourth quarter and
7.1% for the year. The impact of foreign exchange rates on foreign
sales translated into U.S. Dollars increased net sales by
approximately 1.8% during the fourth quarter and reduced net sales by
0.5% during the full fiscal year of 2017. Excluding the impact of
acquisitions and foreign exchange, sales decreased 5.7% during the
fourth quarter and 3.6% for the full year.
-
Net sales at the company’s Commercial Foodservice Equipment Group
increased 13.7% in the fourth quarter and increased 9.1% for the full
fiscal year of 2017 over the comparative prior year periods. During
fiscal 2016, the company completed the acquisition of Follett. During
fiscal 2017, the company completed the acquisitions of Sveba Dahlen,
QualServ, L2F and Globe. Excluding the impact of these acquisitions,
sales decreased 0.7% in the fourth quarter and 2.0% for the full
fiscal year. Excluding the impact of acquisitions and foreign
exchange, sales decreased 2.0% during the fourth quarter and 1.8% for
the full year.
-
Net sales at the company’s Food Processing Equipment Group decreased
1.8% in the fourth quarter and increased 3.1% for the full fiscal year
of 2017 over the comparative prior year periods. During fiscal 2017,
the company completed the acquisitions of Burford, CVP Systems, and
Scanico. Excluding the impact of these acquisitions, sales decreased
13.1% in the fourth quarter and 3.3% for the full fiscal year.
Excluding the impact of acquisitions and foreign exchange, sales
decreased 14.4% during the fourth quarter and 3.5% for the full year.
-
Net sales at the company’s Residential Kitchen Equipment Group
decreased 5.0% in the fourth quarter and 8.8% for the full fiscal year
of 2017 over the comparative prior year periods. Excluding the impact
of foreign exchange, sales decreased 8.2% during the fourth quarter
and 7.2% for the full year.
-
Gross profit in the fourth quarter increased to $240.2 million from
$239.2 million and gross margin rate decreased from 40.1% to 37.9%.
For the full fiscal year of 2017, gross profit increased to $912.7
million from $901.2 million due to increased sales from acquisitions,
offset by the impact of foreign exchange. The gross margin rate
decreased from 39.7% to 39.1%. The decrease in the gross margin rate
for the quarter and full year was primarily due to lower margins at
recent acquisitions. Excluding the dilutive impact of lower margins at
recent acquisitions the gross rate amounted to 39.8% for the fourth
quarter and full year of 2017, respectively.
-
Operating income decreased to $68.9 million from $126.5 million in the
prior year quarter and decreased for the full fiscal year of 2017 to
$410.3 million from $446.2 million in the prior year. Operating income
in the fourth quarter and full year included impairment of intangible
assets in the amount of $58.0 million related to the Viking tradename.
The impairment of the Viking tradename is a result of the continued
decline in revenues resulting from the product recall and legacy
issues. Additionally, operating income in 2017 included $2.5 million
of restructuring costs in the fourth quarter and $20.0 million for the
full year associated with cost reduction initiatives primarily related
to headcount reductions at each of the company’s reportable operating
segments. Operating income in the full fiscal year of 2017 also
included $12.0 million gain on the sale of a manufacturing facility in
connection with relocation to a larger facility which will allow for
improvement in production efficiencies and allow for future
manufacturing consolidation efforts of certain operations.
-
Operating income included $19.9 million of non-cash expenses during
the fourth quarter, including $8.0 million of depreciation expense,
$12.1 million of intangible amortization and ($0.2) million of share
based compensation. Operating income included $74.5 million of
non-cash expenses for the full fiscal year of 2017, including $29.7
million of depreciation expense, $38.6 million of intangible
amortization and $6.2 million of share based compensation.
-
The provision for income taxes in the fourth quarter amounted to
($14.0) million at a (22.8%) effective rate in comparison to $36.9
million at a 31.3% effective rate in the prior year quarter. For the
full fiscal year of 2017, the provision for income taxes amounted to
$85.4 million at a 22.3% effective rate in comparison to $137.1
million at a 32.5% effective rate in the prior year. The fourth
quarter and full year effective tax rate reflects the impact of the
Tax Cuts and Job Act of 2017, including a tax benefit for revaluing
U.S. deferred taxes at the lower corporate income tax partially offset
by the transition tax for the move to a territorial tax system.
Additionally, the full fiscal year of 2017 effective tax rate was
impacted by the adoption of ASU No. 2016-09, “Compensation – Stock
Compensation (Topic718)”, which resulted in the recognition of excess
tax benefits as tax benefits.
-
Net earnings per share amounted to $1.35 in the fourth quarter as
compared to $1.41 in the prior year quarter and $5.26 for the full
year in 2017 as compared to $4.98 in 2016. Net earnings in the current
and prior year were impacted by restructuring expenses, the gain on
sale of plant, the impairment of intangible assets, complying with the
Tax Cuts and Job Act of 2017 and the adoption of ASU No. 2016-09. The
impact of these items reduced earnings per share by $0.13 and $0.03
for the fourth quarter periods, respectively, and $0.90 and $0.12 for
the full fiscal year, respectively.
-
Operating cash flows amounted to $99.6 million during the fourth
quarter and $304.5 million for the full fiscal year of 2017. In
comparison, operating cash flows for the full year increased from
$294.1 million in the prior year.
-
Net debt, defined as debt less cash, at the end of 2017 fiscal fourth
quarter amounted to $939.2 million as compared to $869.0 million at
the end of the third quarter and $663.6 million at the end of fiscal
2016. During the year, the company invested $300.2 million to fund
2017 acquisitions and $239.8 million related to the repurchase of
Middleby common shares.
Selim A. Bassoul Chairman and Chief Executive Officer, commented, “At
the Commercial Foodservice Equipment Group, we realized a modest sales
increase in the general market, which was more than offset by lower
sales to our major restaurant chain customers. Sales to our major
restaurant chain customers remained impacted in the quarter as
replacement purchases were less than prior years as customers evaluated
new equipment solutions, supporting operational improvements and new
menu initiatives. We have a healthy pipeline of sales opportunities and
momentum with these existing and new chain customers, which we
anticipate will convert into in sales in 2018. Sales were also impacted
by strategic initiatives to consolidate our independent selling
organization, which resulted in disruption during the quarter. We are
excited about this initiative allowing us to strengthen and simplify our
selling organization for the future. This effort has allowed us to align
with our strongest sales representatives to carry our portfolio of
leading brands and product innovations. We expect this reorganization
will be largely completed during the first quarter of 2018 and we will
realize benefits during the remainder of 2018. We also anticipate the
new tax law changes may provide further momentum in purchase from our
restaurant customers.”
Mr. Bassoul continued, “At our Residential Kitchen Equipment Group, the
fourth quarter sales decline reflects the impact of lower revenues at
the AGA Group due to acquisition integration initiatives and
reorganization of non-core businesses within the AGA portfolio. We have
remained focused on simplifying those businesses and reducing costs,
which have resulted in significant improvements in profitability. Sales
at Viking also continued to be lower in the fourth quarter reflecting
the lingering impact of the product recall and legacy service and
quality issues, however we have seen improvement in order trends and the
favorable impact of leveraging the investments made in the past several
years in company owned distribution and service. We are very excited
about the new portfolio of products introduced across all the brands in
the segment and have increased products displays at our dealer partners
in addition to our newly established brand centers in New York and
Chicago.”
“At the Food Processing Equipment Group, the decline in revenues
reflects the nature of this business with large projects resulting in
sales volatility. While the pipeline moving into 2018 remains strong,
orders have slowed on large projects, which will continue to impact the
first half of the year. However, we have a positive view on the food
processing industry and are working with our customers on new and
innovative solutions to support production and new food product
initiatives.”
“Although 2017 was a challenging year, we were pleased with the
continued positioning of the company for future profitable growth and
success. Our focus continued to be on reducing our cost structure and
gaining further operational efficiencies at recently acquired companies
and across all three of our business segments. As we have expanded the
business platforms, we enhance the realization of synergies across these
units including initiatives focused on supply chain, production
capabilities, and sales organization simplification. We expect this will
be reflected in continued profit margin improvements in 2018 and beyond.”
“We are also pleased to have completed seven acquisitions in 2017 which
have further added to our Commercial Foodservice and Food Processing
platforms. These acquisitions have added approximately $300 million in
annualized revenues and expanded our product portfolio with highly
complementary and innovative products.”
Conference Call
A conference call will be held at 10 a.m. Central Time on Wednesday,
February 28 and can be accessed by dialing (888) 391-6937 or (315)
625-3077 and providing conference code 6178444#. The conference call is
also accessible through the Investor Relations section of the company
website at www.middleby.com.
A replay of the conference call will be available two hours after the
conclusion of the call by dialing (855) 859-2056 and entering conference
code 6178444#.
Statements in this press release or otherwise attributable to the
company regarding the company's business which are not historical fact
are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
company cautions investors that such statements are estimates of future
performance and are highly dependent upon a variety of important factors
that could cause actual results to differ materially from such
statements. Such factors include variability in financing costs;
quarterly variations in operating results; dependence on key customers;
international exposure; foreign exchange and political risks affecting
international sales; changing market conditions; the impact of
competitive products and pricing; the timely development and market
acceptance of the company's products; the availability and cost of raw
materials; and other risks detailed herein and from time-to-time in the
company's SEC filings.
The Middleby Corporation is a global leader in the foodservice equipment
industry. The company develops, manufactures, markets and services a
broad line of equipment used in the commercial foodservice, food
processing, and residential kitchen equipment industries. The company's
leading equipment brands serving the commercial foodservice industry
include Anets®, Bear Varimixer®, Beech®, Blodgett®, Blodgett Combi®,
Blodgett Range®, Bloomfield®, Britannia®, Carter-Hoffmann®, Celfrost®,
Concordia®, CookTek®, CTX®, Desmon®, Doyon®, Eswood®, frifri®, Follett®,
Giga®, Globe®, Goldstein®, Holman®, Houno®, IMC®, Induc®, Jade®, L2F®,
Lang®, Lincat®, MagiKitch'n®, Market Forge®, Marsal®, Middleby
Marshall®, MPC®, Nieco®, Nu-Vu®, PerfectFry®, Pitco Frialator®,
QualServ®, Southbend®, Star®, Sveba Dahlen®, Toastmaster®, TurboChef®,
Wells® and Wunder-Bar®. The company’s leading equipment brands serving
the food processing industry include Alkar®, Armor Inox®, Auto-Bake®,
Baker Thermal Solutions®, Burford®, Cozzini®, CVP Systems®, Danfotech®,
Drake®, Emico®, Glimek®, Hinds-Bock®, Maurer-Atmos®, MP Equipment®,
RapidPak®, Scanico®, Spooner Vicars®, Stewart Systems® and Thurne®. The
company’s leading equipment brands serving the residential kitchen
industry include AGA®, AGA Cookshop®, Brigade®, Fired Earth®, Grange®,
Heartland®, La Cornue®, Leisure Sinks®, Lynx®, Marvel®, Mercury®,
Rangemaster®, Rayburn®, Redfyre®, Sedona®, Stanley®, TurboChef®, U-Line®
and Viking®.
For more information about The Middleby Corporation and the company
brands, please visit www.middleby.com.
|
THE MIDDLEBY CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS |
(Amounts in 000’s, Except Per Share Information) |
(Unaudited) |
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
| | 4th Qtr, 2017 |
| 4th Qtr, 2016 | | 4th Qtr, 2017 |
| 4th Qtr, 2016 |
Net sales
| |
$
|
632,859
| |
$
|
596,817
| |
$
|
2,335,542
| |
$
|
2,267,852
|
Cost of sales
| |
| 392,695 | |
| 357,640 | |
| 1,422,801 | |
| 1,366,672 |
| | | | | | | |
|
Gross profit
| | |
240,164
| | |
239,177
| | |
912,741
| | |
901,180
|
| | | | | | | |
|
Selling, general & administrative
| | |
110,781
| | |
110,300
| | |
436,491
| | |
444,431
|
Restructuring expense
| | |
2,514
| | |
2,379
| | |
19,951
| | |
10,524
|
Gain on sale of plant
| | |
-
| | |
-
| | |
(12,042)
| | |
-
|
Impairment of intangible asset
| |
| 58,000 | |
| - | |
| 58,000 | |
| - |
Income from operations
| | |
68,869
| | |
126,498
| | |
410,341
| | |
446,225
|
| | | | | | | |
|
Interest expense and deferred financing amortization, net
| | |
7,926
| | |
6,105
| | |
25,983
| | |
23,880
|
Other (income) expense, net
| |
| (272) | |
| 2,526 | |
| 829 | |
| 1,040 |
| | | | | | | |
|
Earnings before income taxes
| | |
61,215
| | |
117,867
| | |
383,529
| | |
421,305
|
| | | | | | | |
|
Provision for income taxes
| |
| (13,971) | |
| 36,931 | |
| 85,401 | |
| 137,089 |
| | | | | | | |
|
Net earnings
| | $ | 75,186 | | $ | 80,936 | | $ | 298,128 | | $ | 284,216 |
| | | | | | | |
|
| | | | | | | |
|
Net earnings per share:
| | | | | | | | |
| | | | | | | |
|
Basic
| | $ | 1.35 | | $ | 1.42 | | $ | 5.26 | | $ | 4.98 |
| | | | | | | |
|
Diluted
| | $ | 1.35 | | $ | 1.41 | | $ | 5.26 | | $ | 4.98 |
Weighted average number shares:
| | | | | | | | |
| | | | | | | |
|
Basic
| |
| 55,650 | |
| 57,022 | |
| 56,715 | |
| 57,030 |
| | | | | | | |
|
Diluted
| |
| 55,654 | |
| 57,243 | |
| 56,719 | |
| 57,085 |
|
|
THE MIDDLEBY CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Amounts in 000’s) |
(Unaudited) |
|
|
| Dec 30, 2017 |
| Dec 31, 2016 |
ASSETS
| | | | |
| | | |
|
Cash and cash equivalents
| |
$
|
89,654
| |
$
|
68,485
|
Accounts receivable, net
| | |
328,421
| | |
325,868
|
Inventories, net
| | |
424,639
| | |
368,243
|
Prepaid expenses and other
| | |
55,427
| | |
42,704
|
Prepaid taxes
| |
| 33,748 | |
| 6,399 |
Total current assets
| | |
931,889
| | |
811,699
|
| | | |
|
Property, plant and equipment, net
| | |
281,915
| | |
221,571
|
| | | |
|
Goodwill
| | |
1,264,810
| | |
1,092,722
|
Other intangibles, net
| | |
780,426
| | |
696,171
|
Long-term deferred tax assets
| | |
44,565
| | |
51,699
|
Other assets
| |
| 36,108 | |
| 43,274 |
| | | |
|
Total assets
| | $ | 3,339,713 | | $ | 2,917,136 |
| | | |
|
| | | |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | | | |
| | | |
|
Current maturities of long-term debt
| |
$
|
5,149
| |
$
|
5,883
|
Accounts payable
| | |
146,333
| | |
146,921
|
Accrued expenses
| |
| 322,171 | |
| 335,605 |
Total current liabilities
| | |
473,653
| | |
488,409
|
| | | |
|
Long-term debt
| | |
1,023,732
| | |
726,243
|
Long-term deferred tax liability
| | |
87,815
| | |
77,760
|
Accrued pension benefits
| | |
334,511
| | |
322,988
|
Other non-current liabilities
| | |
58,854
| | |
36,418
|
| | | |
|
Stockholders’ equity
| |
| 1,361,148 | |
| 1,265,318 |
| | | |
|
Total liabilities and stockholders’ equity
| | $ | 3,339,713 | | $ | 2,917,136 |
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180227006850/en/
Contacts:
The Middleby Corporation
Darcy Bretz, 847-429-7756
Investor
and Public Relations
or
Tim FitzGerald, 847-429-7744
Chief
Financial Officer
Source: The Middleby Corporation
© 2024 Canjex Publishing Ltd. All rights reserved.