Elgin / IL. (tmc) The Middleby Corporation, a leading worldwide manufacturer of equipment for the commercial foodservice, food processing, and residential kitchen industries, reported net earnings for the 2020 second quarter of USD 21.2 million or USD 0.39 diluted earnings per share on net sales of USD 472.0 million. Adjusted net earnings were USD 30.4 million or USD 0.55 adjusted diluted earnings per share.
«While the Covid-19 pandemic has had a major impact on our business, we moved swiftly to adapt, which required significant changes to our business processes and the workplace environment. We are proud to have maintained uninterrupted service and support to our customers given this sizable disruption. Our solid financial performance was a result of successfully reducing our cost structure and maintaining strong levels of profitability across all three of our business segments, despite revenue decreases. Most importantly, our priority is ensuring the continued safety of our employees. We are very grateful for the unwavering commitment of our employees around the world and for their extraordinary efforts during this difficult period,» said Middleby Chief Executive Officer Tim FitzGerald.
2020 Second Quarter Financial Results
- Net sales decreased 38.0 percent in the second quarter of 2020 over the comparative prior year period. Excluding the impacts of acquisitions and foreign exchange rates, sales decreased 39.8 percent in the second quarter, reflecting the impact of Covid-19. Recent acquisitions contributed 2.3 percent of an increase to the second quarter, while the impact of foreign exchange rates on foreign sales translated into U.S. Dollars decreased net sales by approximately 0.5 percent.
- Organic net sales declines were reported at all segments due to Covid-19 impacts and challenging market conditions. A reconciliation of reported net sales by segment is as follows:
|Commercial Foodservice||Residential Kitchen||Food Processing||Total Company|
|Reported Net Sales Growth||(47.9||)%||(31.4||)%||3.9||%||(38.0||)%|
|Foreign Exchange Rates||(0.5||)%||(0.3||)%||(0.8||)%||(0.5||)%|
|Organic Net Sales Growth (1) (2)||(49.4||)%||(32.2||)%||(1.2||)%||(39.8||)%|
|(1) Organic net sales growth defined as total sales growth excluding impact of acquisitions and foreign exchange rates|
|(2) Totals may be impacted by rounding|
- Adjusted Ebitda was USD 74.4 million, due to the impact of lower revenues as a result of Covid-19; however margins at all three segments were strong reflecting focus on cost control and profitability.
- Operating cash inflows during the second quarter increased to USD 77.6 million in comparison to USD 67.6 million in the prior year period. Operating cash inflows for the six months period ended June 27, 2020 increased to USD 164.8 million in comparison to USD 101.6 million in the prior year period. The leverage ratio per our credit agreements remained below 3.0x. Our trailing twelve month bank agreement pro-forma Ebitda was USD 597.1 million.
- Cash balances at the end of the quarter were increased to USD 649.7 million to provide liquidity protection during the global pandemic. Net debt, defined as debt less cash, at the end of the 2020 fiscal second quarter amounted to USD 1,747.2 million as compared to USD 1,778.6 million at the end of fiscal 2019.
«In Commercial Foodservice, we saw consistent improvement in orders from the initial April lows. As we progressed through the month of July, business activity across all of our foodservice segments demonstrated continual improvement. In particular, we have seen strong demand from quick-serve and pizza restaurants, as well as in the healthcare, convenience stores, and retail categories,» commented FitzGerald. «The steady improvement in orders was the result of continued growth in our customers’ drive-through, delivery and pick-up businesses. Order trends have also been supported by varying levels of outdoor and indoor dining which since June and July have become available in every state. We will see volatility in our business as dining restrictions in high-risk states are re-enacted; however, we expect that order demand will remain improved from the second quarter. Our foodservice customers are evolving their operations to address employee safety issues, labor availability and operating challenges to support increasing delivery and drive-through business. We are well-positioned to address these near and longer-term emerging trends given technology investments we have made over the past year.»
«At our Residential Kitchen businesses in both the U.S. and U.K. markets, our order rates also improved as we progressed during the quarter and exceeded the prior year in the month of July. Although orders in July likely include some catch up from prior months, we expect the positive momentum to carry through the third quarter. New demand drivers from the rise of working, staying and eating at home have fueled purchases of both indoor and outdoor residential cooking and refrigeration equipment. Home sales have proven to be resilient, as new home starts in the U.S. in recent weeks are near prior year levels.»
«In the Food Processing Group, demand factors remain strong and we see positive momentum with our recent product innovations targeting both new and existing markets. A trend we are seeing more often is a requirement to increase food production automation and address employee safety and labor availability issues. Travel restrictions caused by Covid-19 have impacted project installations and equipment testing. We anticipate this disruption may impact orders in the near term; however, our backlog remains consistent with levels from the beginning of the year providing stability for upcoming quarters. The group is well-positioned for growth as market conditions stabilize.»
FitzGerald concluded, «While the current environment is subject to uncertainty, we remain confident in our ability to leverage the strength of our industry-leading business platforms while continuing to exercise our proven financial discipline. We are well-positioned across all three business segments to capitalize on emerging trends that will accelerate during this period and we are committed to maintaining the ongoing investments to support our strategic sales and technology initiatives.»