Middleby Corporation: Reports Q4-2020 Results

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 fourth quarter of USD 51.8 million or USD 0.94 diluted earnings per share on net sales of USD 729.3 million. Adjusted net earnings were USD 89.0 million or USD 1.62 adjusted diluted earnings per share.

«While 2020 was a challenging year for our industry and customers, we have been proactive during this time of uncertainty. Our actions in 2020 have positioned Middleby to lead emerging trends and realize growth across all our platforms. We advanced our technology initiatives, expanded our sales capabilities, secured strategic acquisitions, reinforced our supply chain, expanded our global infrastructure, introduced new, innovative products and opened our state-of-the-art Middleby Innovation Kitchens. We have always been an innovative company, but our investments in technology are rapidly accelerating in this changing market. I am proud of our team and the quick and decisive actions taken in 2020, as these contributed to our strong financial performance in the fourth quarter and will carry us into 2021 with momentum. While Covid-19 vaccines are now available to many, safety precautions at our facilities remain in place, as the health and protection of our employees will always be a top priority,» said Tim FitzGerald, CEO of The Middleby Corporation.

2020 Fourth Quarter Financial Results

  • Net sales decreased 7.4 percent in the fourth quarter over the comparative prior year period. Excluding the impacts of acquisitions and foreign exchange rates, sales decreased 9.3 percent in the fourth quarter over the comparative prior year period, reflecting the impact of Covid-19.
  • Organic net sales (a non-GAAP measure) declines were reported at the Commercial Foodservice Group due to Covid-19 impacts and challenging market conditions in the fourth quarter of 2020. Residential sales growth in the fourth quarter of 2020 is primarily related to strong consumer demand. A reconciliation of reported net sales by segment is as follows:
Commercial
Foodservice
Residential
Kitchen
Food
Processing
Total
Company
Reported Net Sales Growth (16.4 ) % 17.3 % (0.6 ) % (7.4 ) %
Acquisitions 1.7 % 1.0 % % 1.3 %
Foreign Exchange Rates 0.5 % 1.4 % (0.2 ) % 0.6 %
Organic Net Sales Growth (1) (2) (18.7 ) % 14.8 % (0.4 ) % (9.3 ) %
.
(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
  • Total backlog at the end of the fiscal 2020 amounted to a record level of USD 522.7 million as compared to USD 307.5 million at the end of fiscal 2019. The increase was driven by growth in excess of 60 percent at the Commercial Foodservice Group and 270 percent at the Residential Kitchen Group over prior year end when excluding backlog from businesses acquired during the year.
  • Adjusted Ebitda (a non-GAAP measure) was USD 145.2 million, in the fourth quarter of 2020 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. A reconciliation of organic adjusted Ebitda (a non-GAAP measure) by segment is as follows:
Commercial
Foodservice
Residential
Kitchen
Food
Processing
Total
Company
Adjusted Ebitda 22.0 % 19.4 % 24.3 % 19.9 %
Acquisitions (0.4 ) % (1.0 ) % % (0.4 ) %
Foreign Exchange Rates % 0.2 % 0.5 % 0.1 %
Organic Adjusted Ebitda (1) (2) 22.4 % 20.2 % 23.8 % 20.3 %
.
(1) Organic Adjusted Ebitda defined as Adjusted Ebitda excluding impact of acquisitions and foreign exchange rates
(2) Totals may be impacted by rounding
  • Operating cash inflows during the fourth quarter increased to USD 208.6 million in comparison to USD 147.7 million in the prior year period. Operating cash inflows for the twelve months period ended January 2, 2021 increased to USD 524.8 million in comparison to USD 377.4 million in the prior year period. The total leverage ratio per our credit agreements was below 3.1x. Our trailing twelve month bank agreement pro-forma Ebitda was USD 529.0 million.
  • Cash balances at the end of the quarter were USD 268.1 million. Net debt, defined as debt excluding the unamortized discount associated with the Convertible Notes less cash, at the end of the 2021 fiscal fourth quarter amounted to USD 1.6 billion as compared to USD 1.8 billion at the end of fiscal 2019. Additionally, our current borrowing availability is approximately USD 1.4 billion.

«In Commercial Foodservice, orders have consistently improved since the initial impact of Covid-19. Restaurants continue to gain experience and proficiency as they perfect their procedures for delivery, carry out, drive-through and curbside pickup. Many chain restaurants who had fluid processes in place pre-pandemic have explored ways to shorten wait times, expand cooking throughput and reduce labor needs. Consumer demand has proven resilient and these operator needs continue to provide growth opportunities for our differentiated solutions. There is pent-up demand for indoor dining which has been consistently opening up across the country, as regulated by the states. This is benefiting our casual dining customers,» said FitzGerald.

«Our focus on innovation is not just equipment – we are retooling the entire customer experience. Last week we were pleased to announce the official debut of the Middleby Innovation Kitchens in the Dallas area, which will allow us to best serve our customers and partners. The 40,000 square-foot facility has 15 live vignettes and 150 pieces of active Middleby equipment including IoT, automation, an extensive beverage offering, a full brewery and space where our customer can design and test their kitchen equipment and workflow. We believe the timing is right for this type of facility as customers want a hands-on experience as they re-invent their foodservice operations,» commented FitzGerald.

«At our Residential Kitchen businesses, we are seeing high interest in recently debuted product innovations across the portfolio of our premium brands. Favorable conditions continue in the housing market, with increased remodels and kitchen upgrades due to more time spent in the home. Our virtual sales experience and showroom tours have been in high demand. We plan to further the 2021 investments in this segment with the completion and opening of our Dallas showroom, targeted digital marketing initiatives and deeper engagement with the designer community.»

«At the Food Processing Group, travel restrictions continue to be a significant challenge with customer demonstrations and installations. Despite this, backlog levels remain strong along with customer interest in recent product introductions and full-line solutions. We remain focused on increasing our presence in fast-growing segments, such as cured meats and alternative protein. We are also positioned to support our customers growing requirements for automation solutions to address labor availability and increased employee safety concerns,» FitzGerald concluded.