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The Middleby Corporation. Financial Performance. Sales. Gross Profit. ($ in millions). ($ in millions). 30% CAGR. 35% CAGR. EBITDA. EPS. ($ in millions). 45% CAGR. 80% CAGR. Free Cash Flow. ($ in millions). Free Cash Flow 1. 46% 6-Yr CAGR. Significant free cash flow generation. - PowerPoint PPT Presentation
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1
The Middleby Corporation
2
Financial Performance
Sales
($ in millions)
Gross Profit
EBITDA EPS
$101.6
$229.1 $242.2$271.1
$316.7
$403.1
$500.5
2001 2002 2003 2004 2005 2006 2007
$32.4
$78.5 $85.9$102.6
$121.7
$156.9
$192.4
2001 2002 2003 2004 2005 2006 2007
$10.6
$28.7$39.0
$46.1
$63.1
$81.8
$99.3
2001 2002 2003 2004 2005 2006 2007
$0.09$0.33
$1.00$1.19
$1.99
$2.56
$3.11
2001 2002 2003 2004 2005 2006 2007
30% CAGR
35% CAGR
45% CAGR
80% CAGR
($ in millions)
($ in millions)
3
$81.8
$99.3
$10.2
$27.6
$38.0
$44.9
$61.7
2001 2002 2003 2004 2005 2006 2007
46% 6-Yr CAGR
Free Cash Flow
1Free Cash Flow = EBITDA - Capital Expenditures
Free Cash Flow1
($ in millions)
Significant free cash flow generation
4
Diverse and Stable Revenue Base
End Market
Pizza 10%
QSR 10%
Fast Casual 20%
Casual 10%
Independent 10%
Institutional 10%
Food Processing 10%
International Food Service 20%
DomesticFood
Service
Product Use
New Store Openings
33%
Menu Changes
33%
Replacement & Maintenance
34%
Majority in international markets
Allows restaurants to differentiate themselves in a competitive market
Installed base of aged equipment in 850,000 establishments
Stable, diversified revenue base with exposure to high growth end markets and limited exposure to new U.S. restaurant openings
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RevenueProtection
Value Added Offering
CompetitiveDynamics
CostPressures
Customer Need Middleby Offering
The opportunity cost of a bad product can cripple a restaurant’s revenue. Equipment is
used to compete effectively and lower customers’ most pressing costs.
Middleby provides leading service with the industry’s best known brands. Middleby works with customers to introduce products that best
meet their needs.
Quality/Reliability
Service
Premier brands in industry
Longest warranties/industry leading service
Test kitchens throughout world
Cooking speed
Adaptability to menu changes
Products offer fastest speed available
Dominant position in fast casual equipment
Food input costs
Labor & safety costs
Energy costs
Products extend life of expensive input costs
Many products are self-cleaning, reducing
labor costs
Numerous products reduce energy costs by
over 30%
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Value Added Offering (cont’d)
Source: National Restaurant Association; Deloitte & Touch; Management Estimates 1 Assumes straight-line depreciation over 7-years. Yearly annual depreciation is less than 0.1% of cost structure.2 Minimal maintenance spend in first 2-3 years, $500 per year thereafter3 Pre-tax and financing
Limited Service Restaurant Unit Economics Illustrative Middleby Product Economics
Product represents 0.1% of cost structure, is immediately P&L accretive and provides attractive ROI/payback
$1,428
% Sales
Sales $2,200,000 100.0%
Cost of Food & Beverage 638,000 29.0% Pitco Fryer: $10,000
Gross Profit 1,562,000 71.0%
Salaries, Wages, Benefits 667,000 30.3% Life: 7 Years
Direct Operating Expenses 106,000 4.8%
Marketing 46,000 2.1% Deprecation Per Year: $1,428
Utilities 68,000 3.1%
Occupancy 163,000 7.4% Deprecation/Sales: 0.06%
Repairs and maintenance 37,000 1.7%
Depreciation 42,000 1.9%
G&A 55,000 2.5%
Other/Corporate Overhead 130,000 5.9%
Operating Profit 249,000 11.0%
Investment $10,000 Yearly Depreciation1,2 $1,428
Yearly Savings– Food $800– Labor $1,200– Energy $3,600
$5,400 Other Savings
– Safety– Speed– Less Downtime
IRR3 50%
Payback period < 2 years
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Competitive Advantage
Focus on leading brands Ability to transform acquired companies Preferred purchaser
Acquisition Capability
Strong relationships with dealers Key partnerships w/leading chains Only viable choice for many product
categories Emphasis on cross-selling
Sales & Marketing
Industry leading service “No-quibble” 10-year warranty Test kitchens throughout world
Service
Efficient operations & use of capital allows for 80%+ ROTIC 12 manufacturing facilities throughout the world Focus on working capital management
Manufacturing
Combined 200 years in industry Strong performance culture Equity ownership of >10%
Management Team
Industry leading innovation process (“customer driving”) Emphasis on quality 6-8 new products each year Ability to measure customer savings
Research & Development
Global operating platform provides significant barriers to entry
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New Product Pipeline – Foodservice
Mini WOW! Oven
Rethermalizer
Solstice Supreme Fryer
Redesigned Combi-Ovens
500 Series Range
Tanduri Oven
Revolving Tapinyaki Griddle
High H Oven
Hydrovection Oven
Rocket Fryer
Ventless Hood
Pressure Fryer
Visual Cooking Combi-Ovens
Samooza Fryer
2007 Introductions 2008 Introductions
New products represent more than 20% of net sales
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New Product Pipeline – Food Processing
Cyclone Belt Oven
Flash Pasteurization
Mid-Size J-Con Oven
Wireless Controls
2007 Introductions 2008 Introductions
Conveyor Fryer
Co-Extrusion
Forming Equipment
Intellijet Water Cutter
New products typically carry profit margins >5% higher than existing products
10
Investment Highlights
Leading value-added manufacturer of hot commercial food service and
processing equipment (#1 or #2 market share in each product)
Products are critical to customers, represent small portion of their budgets,
and provide high ROIs
Unique global operating platform provides significant barriers to entry
U.S. restaurant sales have never declined
Diversified revenue base with exposure to high growth end markets
Focus on continued operational improvements and margin expansion
Successful track record of creating significant value through acquisitions
Long-term annual EPS growth target of 20%, consistent with historical
performance
Proven senior management team with decades of industry experience