October 2006 Investor Presentation. Statements made in this presentation or otherwise attributable...
-
Upload
valerie-wilkerson -
Category
Documents
-
view
216 -
download
0
Transcript of October 2006 Investor Presentation. Statements made in this presentation or otherwise attributable...
October 2006
Investor Presentation
Statements made in this presentation 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, but are not limited to 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.
Forward Looking Statements
1
Company Overview
Middleby Investment Highlights
Market Leader− Established and well-respected brands and leader in the commercial cooking industry
− #1 or #2 market position in U.S. across most product lines
− Introducing 10-12 new, technologically-advanced products every year
Well-Positioned for Continued Growth− Strong pipeline of new differentiated products
− Premiere customer base for replacement market
− Proven acquisition strategy and integration
− Infrastructure in place and well-positioned for quickly-growing international markets
Experienced, Proven Management Team− 12+ record quarters
− Successful record of growth organically and through acquisitions
− Strong profitability and commitment to operations excellence
3
Fryers16%
Grills, Ranges & Broilers
16%
Convection Ovens
10%Heating Cabinets
11%
Baking & Other Ovens
7%Conveyor Ovens
5%
Microwave Ovens
5%
Combi Ovens
6% Toasters / Counterline
4%
Steam Cooking
20%
Market Leader
___________________________1. Source: North American Association of Food Equipment Manufacturers and management estimates.
4
U.S. Hot-side Foodservice Equipment Market by Product (1)
We are focused on the hot-side of the foodservice equipment industry
The U.S. commercial cooking equipment market is ~$1.5B.
The International commercial cooking equipment market is $1B.
The Middleby focus is the hot side
– Most important piece of equipment in the restaurant and critical the success of the restaurant.
– Equipment specification and purchasing decisions driven by chef / operator
– Product pricing driven by differentiated technology
Conveyor Ovens #1 Papa John’s, Pizza Hut,
Domino’s, Costco
Fryers #2 KFC, Dunkin’ Donuts,
McDonald’s, Taco Bell
Convection Ovens #1 KFC, Burger King,
Cracker Barrel, Cheesecake Factory
Ranges #2 Morton’s, Wendy’s,
Bob Evans
Charbroilers #1 Outback Steakhouse,
Applebee’s, Culver’s
Product U.S. Market PositionBrand
___________________________Source: Management estimates.
5
Representative Customers
Market Leading Brands
We succeed due to strong brands, product innovation, service and support and our continuous commitment to quality
Restaurant Baking Ovens #1 Subway, Bob Evans
Warmers Toasters
#1#2
Wendy’s, KFC, IHOP McDonald’s, Chick-fil-A
Food processing ovens#2 SaraLee, Smithfield
Food packaging equipment #2 Kraft, Hormel
Combi-ovens Ovens N/A Fast-growing European
markets
Product U.S. Market PositionBrand
___________________________Source: Management estimates.
6
Representative Customers
Market Leading Brands (con’t)
We succeed due to strong brands, product innovation, service and support and our continuous commitment to quality
Middleby Brand Products
Conveyor Oven Combi Oven Convection Oven Fryer
Range Infrared Broiler Steamer Baking Oven
7
Automated oven with energy management system
Combination steam and convection in one cavity
No-turn bake capabilities Highest efficiency burner
Non-clog burner and water proof controls
Used by the best steakhouses in the world
Boilerless, no-lime steamer V-air technology cooks bread in less than 15 minutes
We offer a comprehensive line of innovative cooking equipment
Strong Relationships with Premier Customers
Blue-chip, customer base
Long standing relationships
Limited customer concentration
Large installed base
Serve all food segments
8
Middleby Sales Growth Drivers
New Products
Acquisitions
Replacement Market
International Sales
1) Sales Growth Drivers—New Products
WOW! Oven
Rocket Fryer
Bakery Ovens
Strato Steam
WOW! Oven
Rocket Fryer
Hydrovection
Cyclone Oven
Flash Pasteurization
The Middleby brands introduce10-12 new products every year. By listening to our customers, new products are then developed to meet their needs and satisfy industry trends such as energy savings and speed.
Energy Savings Speed
9
Growth Drivers—Middleby R&D
Benefit: Improved Profit Margins
Disruptive Design
Benefit: Sales Growth Benefit: Customer retention and brand image
Brand Extension Catalyst Design
WOW Oven Rethermalizer StratoSteam
Strategic Market Transformation
Designs that reinterpret existing categories with features and benefits
Value to bottom line of customers
10
2) Sales Growth Drivers—Acquisitions
$400 million market
$10 million
$600 million market
$40 million
$20 million
Two New Middleby Platforms
Combi Ovens Food Processing and Packaging
11
Recent Acquisitions
Acquisition Criteria:– Leading Brands– Patented Technology– Focused on Cooking
12
Recent Acquisitions
Alkar Rapidpak acquisition allows expansion of customer base into food processing, Denmark-based Houno brings to Middleby European manufacturing and technology.
Rationale
Alkar and RapidPak: Broadened product lines and customer base to expand cooking for food processing industry. Benefit from precooked and “ready to eat” trends as fewer meals are prepared at home
Houno:Gives Middleby a strong presence in quickly-growing European markets.
Both: Opportunities to transfer technology across companies
Integration Initiatives
Technology Transfer
SKU rationalization and Product Pricing
Cost Reduction and Purchasing Savings
Successful Acquirer
Blodgett a key strategic acquisition
− More than doubled size of company
− Integrated and refocused on strength of brands
− Successful new product launches
Post-Blodgett integration, we continue to be opportunistic
− Nu-Vu acquisition presents great opportunity
− Foodservice equipment industry remains fragmented
13
Blodgett Acquisition Nu-Vu Acquisition
Transforming Blodgett acquisition; compelling Nu-Vu acquisition in 2005
Rationale
Broadened product lines to provide more complete range of hot-side foodservice equipment
Better positioned us with fast growing segments of foodservice industry
Achievements and Synergies
Rationalized headcount
Consolidated manufacturing facilities
Refocused business on core products
Rationale
Acquired in January 2005
Leader in baking ovens and proofers
Fills gap in product line
Complementary technologies provide further ability to innovate
Synergy Opportunities
Cross-selling to be realized
Manufacturing / productivity improvements
3) Sales Growth Drivers—Replacement Market
Middleby Marshall Conveyor Ovens
Convection Ovens
Transfat filter oil fryers
Stratosteam Gas: boilerless
14
4) Sales Growth Drivers—International Market
Local chains
Specifically designed product for regional specifications
Reorganization of Middleby Worldwide
15
Unique Global Footprint
Net Sales by Geography
Global presence through sales, service and manufacturing in key international markets
Mississauga, Ontario, Canada
Bilbao, Spain Manchester, UK Delhi, India Seoul, South Korea
Shanghai, China
Taipei, Taiwan
Manila, Philippines
Mexico City, Mexico
Key Advantages
16
Manufacturing facility, sales office and test kitchen Sales office with test kitchen Sales office only
Test kitchens throughout the world allow us to educate customers of the benefits of our equipment through hands-on experience and training
Worldwide service is critical and highly valued by U.S. chains expanding into international markets
Worldwide sales infrastructure allows direct contact with key decision makers, especially in high-growth Asian markets
Philippines manufacturing provides regional presence in high-growth Asian markets and low-cost manufacturing capabilities for U.S. market
Profit Growth Drivers
$100 Million
Outsourcing to China
Reverse auctions
Higher Margin Products
WOW
500 Range
Plant Operating Rationalization: consolidation of Toastmaster and Nu-Vu
Move high labor process to the Philippines
Supply Chain
Higher Margin Products
Plant Efficiencies
17
Financial Review
$132.5 $127.0$103.6
$235.1 $242.2$271.1
$316.8
$359.5
$132.3
73.0
$6.3 $11.4 $15.5 $11.5 $33.9 $38.6 $52.2 64.6 12.2%
14.4% 15.9%19.2% 20.4% 20.3%
11.1%4.8%8.6%
0
100
200
300
$400
1998 1999 2000 2001 2002 2003 2004 2005
0
10
20
30
40%
Net Revenue EBITDA EBITDA Margin
New managementteam in place
Middleby operationsrestructured
Blodgett acquired inDecember 2001
Blodgett operationsrestructured
Jan 2005Nu-Vu
acquired
Dec 2005ALKAR
acquired
Financial Overview
Middleby Financial Performance
($ in millions)
$132.5 $127.0$103.6
$235.1 $242.2$271.1
$312.1
$395.5
$6.3 $11.4 $15.5 $11.5$33.9 $38.6 $52.2 $52.2
$87.4$132.3
12.2%14.4% 15.9%
19.2% 20.5% 22.1%
11.1%4.8%8.6%
0
100
200
300
$400
1998 1999 2000 2001 2002 2003 2004 2005E 2006E
0
10
20
30
40%
Net Revenue EBITDA EBITDA Margin
19
Aug 2006Houno
acquired
Track Record of Growth
Historical Net Sales
21
$317.0
$271.1
$242.2
$235.1
$200
$210
$220
$230
$240
$250
$260
$270
$280
$290
$300
$310
2002 2003 2004 2005
Net Sales
CAGR = 9.9%
Focus on Profitability
Historical Gross Profit and Margin
22
Historical Operating Income and Margin
($ in millions)
$121.6
$102.6
$85.9
$78.5
33.4%35.4%
37.9%38.4%
$0
$20
$40
$60
$80
$100
$120
$140
2002 2003 2004 2005
0%
10%
20%
30%
40%
50%
60%
Gross Profit Gross Margin
$29.7
$35.0
$49.0
$58.0
18.3%18.1%
14.5%
12.6%
$0
$10
$20
$30
$40
$50
$60
2002 2003 2004 2005
0%
5%
10%
15%
20%
25%
Operating Income Operating Margin
___________________________Note: 2004 operating income and margin exclude stock repurchase transaction expenses of $12.6 million and acquisition integration reserve reversal of $1.9 million. See the Company’s
10-K for further disclosure.
Focus on Margin Improvement
Operating Strategy
Decentralized operations
Incentivizing employees on financial performance goals
Achieving engineering and R&D excellence
Driving operational efficiencies
23
Proven Results
We have achieved success due to our focus on our core management philosophy
Product standardization
− Significant improvements in productivity through reduction
of man hours
Material cost initiatives
− Reduction of suppliers / improved sourcing
Plant consolidation and headcount reduction
− Successful integration of acquisitions
Focus on higher margin products
− Eliminated less profitable product lines
Improvement in capacity utilization
− Strategic shifts in manufacturing and production
Utilization of low-cost facility
− Increased utilization of Philippines facility for U.S.
component manufacturing
Net Sales increased 27% in 1st half
− 9.0% organic growth
− 18.0% acquisition growth
Gross margins impacted by:
− Benefit of increased volume and production efficiencies
− Increased steel and other material costs
− Impact of acquisitions
Operating costs impacted by:
− Impact of acquisitions
− Higher commissions due to increased sales
− Rising interest rates
Results Commentary
24
(Amounts in millions, except per share data)
YTD YTD
Q2 2006 Q2 2005
Net Sales $ 201.6 $ 158.8
% Growth 27.0% 17.3%
Gross Profit $ 77.2 $ 59.7
% Margin 38.3% 37.5%
SG&A $ 41.8 $ 31.3
% Sales 20.7% 19.7%
Operating Income $ 35.4 $ 28.3
% Sales 17.5% 17.8%
Interest Expense, net $ 3.8 $ 3.5
Net Earnings $ 19.1 $ 15.3
Diluted EPS $ 2.32 $ 1.91
Weighted Avg Shares 8.2 8.0
2006 First Half Review
Financial Themes
Top Line Growth− Positioned in faster growing segments
− Continued new product innovation
− Impact of acquisition
Focus on Operating Margins− Standardization of product platforms
− Strategic supply chain initiatives
− Integration of Alkar
Strong Balance Sheet− Continued debt reduction
− Capacity to pursue strategic acquisitions
20
Key Investment Highlights
Market Leader on Hot-Side of Foodservice Equipment
Established Well-Respected Brands
Premier Customer Base
Positioned for Growth
Unique Global Footprint
Strong Profitability and Commitment to Operational Excellence
Successful Track Record of Growth through Acquisitions
Experienced and Proven Management Team
25