Middleby Corp. Reports Operating Results (10-Q)

Middleby Corp. (MIDD, Financial) filed Quarterly Report for the period ended 2009-04-04.

MIDDLEBY CORP. through its subsidiaries and their operating divisions is engaged in the manufacture and sale of commercial foodservice equipment and beverage merchandisers. It designs develops manufactures and markets a broad line of equipment used for the cooking preparation and refrigeration of food for commercial and institutional kitchens and restaurants along with a line a refrigerated display coolers used primarily by soft drink bottlers in supermarkets and other retail outlets. Middleby Corp. has a market cap of $786.9 million; its shares were traded at around $42.59 with a P/E ratio of 11.1 and P/S ratio of 1.3. Middleby Corp. had an annual average earning growth of 38.1% over the past 10 years. GuruFocus rated Middleby Corp. the business predictability rank of 4-star.

Highlight of Business Operations:

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general, and administrative expenses increased from $32.9 million in the first quarter of 2008 to $40.7 million in the first quarter of 2009. As a percentage of net sales, operating expenses increased from 20.4% in the first quarter of 2008 to 22.4% in the first quarter of 2009. Selling expenses increased from $16.2 million in the first quarter of 2008 to $16.3 million in the first quarter of 2009. Selling expenses reflect increased costs of $3.6 million associated with the acquired operations of Frifri, Giga and TurboChef partially offset by reduced costs of $2.4 million associated with commission expense due to lower sales and lower rates. General and administrative expenses increased from $16.6 million in the first quarter of 2008 to $24.4 million in the first quarter of 2009. General and administrative expenses reflect $4.0 million of costs associated with the acquired operations of Frifri, Giga and TurboChef and $2.3 million associated with the closure and consolidation of a manufacturing facility.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs decreased to $3.1 million in the first quarter of 2009 as compared to $3.7 million in the first quarter of 2008, due to lower interest rates on increased borrowings resulting from recent acquisitions. Other expense was $0.3 million in the first quarter of 2009, which primarily consisted of foreign exchange losses, as compared to other expense of $0.4 million in the prior year first quarter.

During the three months ended April 4, 2009, cash and cash equivalents increased by $2.7 million to $8.8 million at April 4, 2009 from $6.1 million at January 3, 2009. Net borrowings increased from $234.7 million at January 3, 2009 to $346.1 million at April 4, 2009.

During the three months ended April 4, 2009, working capital levels changed due to normal business fluctuations, including the impact of increased seasonal working capital needs. The changes in working capital included a $8.7 million increase in accounts receivable, a $5.6 million decrease in inventory, and a $5.6 million increase in accounts payable. Prepaid and other assets decreased $0.5 million. Accrued expenses and other non-current liabilities also decreased by $15.1 million.

INVESTING ACTIVITIES. During the three months ended April 4, 2009, net cash used in investing activities amounted to $117.9 million. This includes cash utilized to complete the acquisition of TurboChef of $116.1 million and $1.9 million of capital expenditures associated with additions and upgrades of production equipment.

FINANCING ACTIVITIES. Net cash flows provided by financing activities were $111.7 million during the three months ended April 4, 2009. The net increase in debt includes $112.3 million in borrowings under the company s $497.5 million revolving credit facility utilized to fund the company s investing activities.

Read the The complete ReportMIDD is in the portfolios of Robert Olstein of Olstein Financial Alert Fund.