Transcript Roth - Middleby Corporation

Roth Capital Growth Conference
ROTH Capital
Growth Conference
February 19, 2008
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Forward Looking Statements
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.
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Middleby Corporation Executive Summary

The Middleby Corporation is the worldwide leader in the manufacture and
distribution of a broad line of Cooking, Warming and Preparation Equipment for the
commercial restaurant industry and food processors

Headquartered in United States (Chicago, Illinois)

Publicly traded on US stock exchange (symbol: MIDD)

$500+ million in annual revenue

1,600 employees

12 Worldwide Manufacturing Facilities
– 11 US Facilities
– 1 European Facility
– 2 Asian Facilities
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Key Company Highlights

Market Leader of Foodservice Equipment
– #1 or #2 market position in U.S. across most product lines

Established Well-Respected Brands
– Premium brands recognized for innovative technology, efficiency and quality

Premier Customer Base
– Aligned with leading U.S. and international restaurant chains and food
processors

Positioned for Growth
– Strong pipeline of new differentiated products
– Focus on higher growth segments across diverse end markets

Unique Global Footprint
– International sales and service infrastructure provides attractive opportunities in
emerging markets

Strong Profitability And Commitment to Operational Excellence
– Ongoing success in process improvements

Successful Track Record of Growth through Acquisitions
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Record Sales and Earning
EarningsGrowth
Growth
($ in millions)
Middleby Financial Performance
600
500
500
403.2
400
316.8
300
200
100
235.1
242.2
271.1
Revenues
EBITDA
103.6
11.5
33.5
38.8
52.2
64.6
86
100
0
2001
2002
2003
2004
2005
2006
2007 LTM
Sales Growth through Product Innovation and
Acquisition of Industry Leading Brands
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Strong Relationships with Premier Customers

Blue-chip, customer base

Long standing relationships

Limited customer concentration

Large installed base

Serve all food segments
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Revenue Breakdown
15%
Food Processing
Commercial Foodservice
85%
Commercial Foodservice and Food Processing
Expanding Business Segments
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Commercial Foodservice Market Leader
Middleby has leading brands and technology in the the foodservice equipment industry
U.S. Hot-side Foodservice Equipment
Market by Product (1)
Baking &
Other Ovens
7%
Conveyor
Ovens
5%
Microwave
Combi
Ovens
Ovens
5%
6% Toasters /
Counterline
4%
Convection
Ovens
10%
Heating
Cabinets
11%

The commercial cooking equipment
market is in excess of $3.0 Billion.

Highly fragmented

Middleby focus on Brands and Technology
– Equipment in the restaurant and critical
the success of the restaurant.
Fryers
16%
Grills, Ranges
& Broilers
16%
Steam
Cooking
20%
– Equipment specification and
purchasing decisions driven by chef /
operator
– Product pricing driven by differentiated
technology
___________________________
1. Source: North American Association of Food Equipment Manufacturers and management estimates.
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Market Leading Brands - Foodservice
Brand
Product
U.S. Market Position
Representative Customers

Papa John’s, Pizza Hut,
Domino’s, Costco, Red
Lobster, Olive Garden

Conveyor Ovens
#1

Fryers
Rethermalizers
#2
#1

KFC, Dunkin’ Donuts,
McDonald’s, Taco Bell
Convection Ovens
Combi-ovens
Deck Ovens
#1
#2
#2

KFC, Burger King,
Cracker Barrel,
Cheesecake Factory
Ranges
Upright Boilers
#2
#1

Morton’s, Wendy’s,
Bob Evans
Charbroilers
Griddles
#2
#2
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Outback Steakhouse,
Applebee’s, Culver’s
Baking Ovens
Proofers
#1
#1

Subway, Bob Evans
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We succeed due to strong brands, product innovation, service and support and our
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continuous commitment to quality
Market Leading Brands - Foodservice (cont)
Brand
Product
U.S. Market Position
Warming Cabinets
Cook and Hold
Banquet Carts
#1
#2
#2
Infrared Ovens
Hearth Bake Conveyors
#1
#1
Cooking Suites
Ranges
Custom Cooking
#1
#3
#1

Ventless Cooking
Warming Equipment
Pressure Fryers
#1
#1
#3

Combi-ovens
#5
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Representative Customers

McDonalds,
Dunkin Donuts

Telepizza

Cheesecake Factory,
PF Changs

KFC, McDonalds,
Waffle House

Tesco, Morrisons
We succeed due to strong brands, product innovation, service and support and our
continuous commitment to quality
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Market Leading Brands - Foodservice (cont)
Brand
Product
U.S. Market Position
Representative Customers
#1
#1


Counter line Equipment
Panini Grills
7-Eleven, QT Express,
Taco Bell

Toasters
#1

Chipotle, Panera Bread,
Quizno’s

Marine Equipment
#1

Carnival Cruise Ships

We succeed due to strong brands, product innovation, service and support and our
continuous commitment to quality
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Middleby Brand Products
We offer a comprehensive line of innovative foodservice equipment
Conveyor Oven
 Automated oven with energy
management system
Range
 Non-clog burner and water
proof controls
Combi Oven
 Combination steam and
Convection Oven
 No-turn bake capabilities
Fryer
 Highest efficiency burner
convection in one cavity
Infrared Broiler
 Used by the best
steakhouses in the world
Steamer
 Boilerless, no-lime steamer
Baking Oven
 V-air technology cooks bread
in less than 15 minutes
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Food Processing Industry
Middleby has leading brands and technology in the food processing equipment industry
U.S. Hot-side Foodservice Equipment
Market by Product (1)
Packaging
15%
Grinding
6%
Breading/
Battering
11%
Slicers/
Emulsifying
15%
Forming
9%
The food processing equipment
market is in excess of $1.5 Billion.

Highly Fragmented

Middleby focus on Brands and
Technology
– Equipment specification and
purchasing decisions driven by
operators and engineers
Fryers
7%
Ovens
22%

– Product pricing driven by
differentiated technology
Portioning
15%
___________________________
1. Source: Management estimates.
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Market Leading Brands – Food Processing
Brand
Product
U.S. Market Position
Representative Customers
Batch Ovens
Continuous Ovens
Belt Ovens
#1
#1
#2

Sara Lee, Smithfield

Food Packaging
Equipment
#2

Kraft, Hormel
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Conveyorized Breaders
Battering Equipment
Forming
Slicing
#2
#1
#2
#2

Tyson, Pilgrims Pride,
Keystone Foods, OSI
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We succeed due to strong brands, product innovation, service and support and our
continuous commitment to quality
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Middleby Growth Drivers

Favorable Industry Dynamics

New Product Pipeline
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Acquisitions

International Expansion
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Favorable Industry Dynamics
Many factors supporting growing demand for foodservice equipment
Favorable Demographics
New Restaurant /
Store Openings
Menu Changes
Replacement of
Existing Equipment
Expansion of
International Markets
Rising Foodservice
Operator Costs

Dual income families continue to eat out

Percentage of household income spent on food prepared outside the home is increasing
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Baby boomer generation approaching retirement
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Growth in fast casual dining and breakfast
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Emergence of co-branding process is gaining steam
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Expansion of new menu items driving purchases of new foodservice equipment
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On-premise baking more prevalent
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Growing awareness of nutrition implemented through low carb diets and increased presence of
salads with grilled meat and fish
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Average lifespan of foodservice equipment is ~8 years
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Large installed base (over 850,000 establishments in US)
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Replacement represents approximately one-third of the market
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Trend in eating out gaining momentum
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Rapid growth in developing nations such as China and India
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U.S. chain concepts expanding internationally
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Foodservice operators demanding greater productivity through automation
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Need for equipment with greater energy cost savings
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Increased cost of trans-fat free oil
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New Products Driving Growth
We are committed to meeting changing customer needs
Recent Innovations
Customer Demand

Speed


Energy/Cost Savings
Automation/Efficiency
Safety
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No-turn bake convection oven
High speed conveyer with 25% reduction in cooking time
Hydrovection ovens
New energy management system technology
High efficiency fryers
Self cleaning ovens
Advanced controls
Auto shut-off pilots in ranges
Waterproof controls
Our Success
We Introduce More than 10 Innovative New Products Each Year
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New Product Pipeline - Foodservice
2008 Introductions
2007 Introductions

Mini WOW! Oven
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High H Oven
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Rethermalizer
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Hydrovection Oven

Solstice Supreme Fryer
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Rocket Fryer
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Redesigned Combi-Ovens
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Ventless Hood

500 Series Range

Pressure Fryer
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Tanduri Oven
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Visual Cooking Combi-Ovens
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Revolving Tapinyaki Griddle
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Samooza Fryer
New Products Represent more than 20% of Net Sales
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New Product Pipeline – Food Processing
2007 Introductions
2008 Introductions
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Cyclone Belt Oven
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Conveyor Fryer
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Flash Pasteurization
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Co-Extrusion
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Mid-Size J-Con Oven
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Forming Equipment
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Wireless Controls
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Intellijet Water Cutter
New Products Typically Carry Profit Margins >5% Higher than existing Products
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Acquistion Strategy

Acquire Leading Brands and Technologies
• Established Market Positions
• Differentiated Products
• Higher Profit Margin

Increase Operating Efficiency
• Eliminated Unprofitable SKU’s
• Focus on Core Products
• Streamline Production and Administrative Processes

Realize Synergies
•
•
•
•
Increased Purchasing Leverage
Utilization of Middleby Low Cost Production Facilities
Leverage Sales and Distribution Network
Leverage Existing Chain Relationships
Creating the Premier Foodservice Equipment Company
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Middleby Worldwide Executive Summary

Middleby Worldwide is the sales, service and distribution arm
supporting the Middleby Brands internationally in over 100
countries. Middleby Worldwide has company owned operations
in key markets around the world.

Middleby Owned Sales and Service Offices in Key Markets:
– Mexico
– Australia
– UK
– Spain
– Sweden
– China
– India
– Korea
– Taiwan
– Philippines
– Mid-east
– Russia
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Global Reach
Mississauga,
Ontario, Canada
# of Employees: 2
Bilbao, Spain
# of Employees: 11
Manchester, UK
# of Employees: 20
Delhi, India
# of Employees: 5
Seoul, South Korea
# of Employees: 11
Shanghai, China
# of Employees: 14
Taipei, Taiwan
# of Employees: 7
Manila, Philippines
# of Employees:
- Manufacturing: 95
- Sales & Dist.: 16
Mexico City, Mexico
# of Employees: 26
Manufacturing facility, sales office and test kitchen
Sales office with test kitchen
Sales office only
Key Advantages

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Test kitchens throughout the world allow Middleby to educate customers of the benefits of its
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 markets
Philippines and China manufacturing capabilities provides regional presence in high-growth
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Asian markets
Financial Themes

Top Line Growth
– Positioned in faster growing segments
– Continued new product innovation
– Acquisition growth

Focus on Operating Margins
– Standardization of product platforms
– Strategic supply chain initiatives
– Integration of recent acquisitions

Strong Balance Sheet
– Continued debt reduction
– Capacity to pursue strategic acquisitions
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Key Investment Highlights

Market Leader 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
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