EX-99.1 2 ex99182620.htm EXHIBIT 99.1
Exhibit 99.1 Seaport Global August 26, 2020 www.middleby.com 1

COVID‐19 Implemented Actions We have implemented the following in response to COVID‐19: • Employee Safety – Implemented companywide procedures including mandated mask policies, enhanced COVID‐19 UPDATE workplace sanitation, travel discontinuation, social distancing, staggered shifts and established work‐at‐home protocols for non‐production employees. In response to the COVID‐19 pandemic, we • Customer Support – Ensured continued access to customer support, technical service and uninterrupted implemented swift actions to protect our shipping of service parts and finished goods. Production continued to meet customer demand with minimal employees, ensure uninterrupted service to disruptions to address employee safety precautions. our customers and aggressively adjust our • Cost and Profitability Initiatives – Instituted aggressive reduction of all controllable and discretionary costs. business and cost structure for a decline in This included the adjustment of global office and production workforces in response to near‐term reduced demand levels and reduced cash compensation to executives. Increased focus on prioritizing product and revenues. Our businesses in all three customers with highest profitability. segments support an essential daily • Supply Chain – Established a task force to identify and mitigate supply chain disruption and ensure continuity requirement, food, and thus have been of business operations and customer support. designated as essential globally. We are • Liquidity and Cash Flow – Reduced capital expenditures for the remainder of year, enhanced working capital proud to continue to support our customers, initiatives to drive inventory efficiency, deferred near‐term acquisition investments and suspended the while adhering to strict employee safety Middleby share repurchase program. Maintaining investments in key strategic initiatives. standards at all worldwide operations. • COVID‐19 Product Introductions – Developed and launched products addressing COVID‐19 needs, including sterilization units for N95 masks, mobile and touchless handwashing stations, plexiglass safety shields for restaurants and retail locations, mobile foodservice stations and hand and cleaning sanitizer produced at our most recent‐acquired company Deutsche. www.middleby.com 2

Financial Results Q2 2020 FINANCIAL RESULTS RESULTS COMMENTARY 2Q20 2Q19 Change • Revenue decline of 40% organically Net Sales $472.0 $761.0 ‐38.0% Gross Profit 153.1 286.5 ‐46.6% • Organic growth declines in all segments due to COVID‐19 impacts. % of Sales 32.4% 37.6% Commercial Foodservice (49%) and Residential Kitchen (32%) and Food Processing (1%) Operating Income 39.1 139.6 ‐72.0% • In spite of challenging market conditions, given our industry‐leading margins and focus on cost control, while ensuring sufficient continuity Net Earnings 21.2 92.2 ‐77.0% of operations, we generated strong levels of profitability. Adjusted EBITDA 85.0 172.5 ‐50.7% • % of Sales 18.0% 22.7% We continue to generate strong Adjusted EBITDA across all segments: • Commercial Foodservice 17.9% • Food Processing 22.6% LTM Bank EBITDA 597.1 671.6 ‐11.1% • Residential Kitchen 12.2% as defined in credit agreement • Q2 2020 operating cash flow increased over the prior year and included the benefit of reduced working capital. Operating Cash Flow 77.6 67.6 14.8% • Our LTM cash flows were a record high at $440.6 million. • We expect positive cash flows for the remainder of 2020. www.middleby.com 3

Segment Results Commercial Foodservice Residential Kitchen Equipment Food Processing 2Q20 2Q19 Change 2Q20 2Q19 Change 2Q20 2Q19 Change Revenues 267,500 513,279 ‐47.9% Revenues 102,914 149,872 ‐31.3% Revenues 101,563 97,853 3.8% EBITDA 47,864 129,785 ‐63.1% EBITDA 12,589 27,476 ‐54.2% EBITDA 22,983 20,965 9.6% EBITDA as % 17.9% 25.3% EBITDA as % 12.2% 18.3% EBITDA as % 22.6% 21.4% of Revenues of Revenues of Revenues Revenue and Growth Revenue and Growth Revenue and Growth U.S. 195,900 ‐45.2% U.S. 81,700 ‐18.7% U.S. 72,800 25.3% Non‐U.S. 71,600 ‐54.0% Non‐U.S. 21,200 ‐57.1% Non‐U.S. 28,800 ‐27.5% Domestic and international revenue decline as a Organic EBITDA for 2Q20 was 14.0%. Domestic Domestic revenue growth was driven by protein result of COVID‐19; however order rates showed and international revenue declined as a result of equipment and offset by international revenue improvement throughout the quarter. Several COVID‐19, in addition to the lingering impacts of declines due to COVID‐19. Volatile order rates market sectors with stronger demand include QSR, Brexit in the U.K. Demand growth during the during quarter, while maintaining a solid backlog pizza, healthcare and c‐stores. Focused efforts on quarter given the rise in home improvement going into the second half of 2020. providing solutions for customers to meet current projects and new home sales. Housing market safety and operational needs. remains resilient during this challenging time. www.middleby.com 4

Debt and Liquidity Q2 2020 LEVERAGE RATIO (IN $000S) LIQUIDITY COMMENTARY * Cash 610.2 • Record LTM operating cash flow of $440.6 million as of Q2 2020 Debt 2,396.9 • In Q1 2020, Middleby entered into an amended and restated five‐year, $3.5 billion Net Debt 1,786.7 multi‐currency senior secured credit agreement providing it with additional liquidity and financial flexibility LTM EBITDA* 597.1 • Last week Middleby completed a convertible notes sale and amended the senior Leverage 2.99x secured credit agreement Covenant Limit 4.00x • Issued $747.5 million of five‐year convertible notes, with a 1% interest * As defined in the credit agreement coupon and 33% conversion premium • Purchased a capped call to effectively increase the conversion price from $128.62 to $207.93 which greatly reduces dilution risk (less than 2% 10‐YEAR FREE CASH FLOW GROWTH (in 000s) dilution projected at $250 share price) $402 • Notes proceeds of $400 million were used to pay down outstanding borrowings and the bank credit facility will decrease by the same size • Total leverage (incurrence) covenant will expand to 5.5x, allowing the company flexibility to continue operational and strategic investments • At leverage ratios of below 4x, the borrowing cost to the company remains unchanged by the amendment. Borrowing rates increase at higher leverage levels up to LIBOR plus 250 basis points at the highest allowable borrowing levels • On a pro forma basis, borrowing capacity would have been approximately $1.6 billion as of Q2 2020 www.middleby.com • Pro forma secured leverage ratio of 1.94x and total leverage ratio of 3.20x 5

Middleby Segment Summary SEGMENT REVENUES THREE INDUSTRY‐LEADING FOODSERVICE PLATFORMS Food Processing 13.5% • Commercial 100+ highly‐respected, leading brands 67.1% • Global business infrastructure Residential 19.4% • Highly synergistic business segments • Technology and innovation leader SALES BY GEOGRAPHIC REGION Asia 8.7% • Strong track record of profitability and cash flow • Well positioned for existing and new market trends United States Europe and and Canada Middle East 65.7% 21.9% Latin www.middleby.com America 6 3.7%

Near‐Term Business Conditions—Recent Order Trends April May June July August April May June July August August ▼65% ▼55% ▼39% ▼17% ▼31% ▼53% ▼35% ▼9% 28% 59% Commercial Food Service Residential Kitchen Business in quick‐serve, pizza, retail, c‐store and At our residential businesses in both the US and UK healthcare continue to be resilient with increased markets, the impact of COVID‐19 resulted in the demand for delivery, drive‐through and carry‐out. widespread temporary closure of our residential Although significant challenges remain, conditions dealers' retail sales locations due to shelter‐in‐ have improved for casual dining restaurants with place restrictions. Substantial order improvement outdoor dinning available and dine‐in also open in has occurred as dealer and retail locations have re‐ most states. Bars and nightclubs along with travel opened. Additionally, the increase of working, and leisure remain significantly impacted. In the staying and eating at home has given rise to a marketplace there continues to be a heightened demand for both indoor and outdoor residential focus on employee and customer safety and related cooking and refrigeration equipment. Home sales solutions. Middleby is well positioned to support have proven to be resilient, while new home starts new and accelerating trends with innovative in the US in recent weeks are near prior year levels. products and technology to address workplace safety, enhanced delivery solutions, restaurant automation and ongoing essential operating needs. www.middleby.com 7

COVID‐19 Restaurant Impacts Domestic restaurant same store sales MILLERPULSE WEEKLY INDUSTRY SAME STORE SALES, 2020 have consistently improved since the March decline according to multiple restaurant data resources. Restaurants are rapidly adapting to the new the new normal: • Expanding to‐go options, with curbside pick‐up and third‐party delivery • Adding or improving mobile and online customer ordering capabilities • Rapidly adapting menus to best support limited staffing, unpredictable dine‐in and/or carryout options • Restaurants in all states offer delivery and carry out, with most states open for dine‐in with restrictions • According to Technomic August data, 10% of restaurants will close in 2020. • Restaurant sales are projected to be up Source: MillerPulse 18.3% in 2021 over 2020, according to Week 33 ended Technomic. 8/17/2020 www.middleby.com 8

COVID‐19 Restaurant Impacts www.middleby.com 9

Middleby Revenue Composition – Commercial Foodservice SEGMENT IMPACT • Quick serve and fast casual fare better due to delivery, drive through and carry out support. Same store sales trend Week 33 Sales Ended 8/17/20 ahead of prior year in recent weeks • Pizza performs well as delivery is their Industry (1.3) core and large chains aim to hire 60,000 additional employees • Fast casual demand remains and QSR 3.4 restaurants have adjusted, requiring improved delivery and take‐out services Fast Casual (7.9) • Retail and c‐stores continue to see demand as their customers pursue Casual Dining (24.6) alternative foodservice options that are Miller Pulse Data not dine‐in Week ended 8/17/2020 • Healthcare and assisted living sectors continue to perform well • Casual and fine‐dining heavily impacted • Travel and leisure market is challenged as air travel is significantly impaired. Hotel occupancy is down ~50% www.middleby.com 10

Middleby Revenue Composition – Commercial Foodservice OPERATOR SPENDING MENU DRIVEN PARTS 8% • Near‐term focus on replacement, capacity 17% and maintenance of equipment • Better performing sectors and concepts continuing with enhanced menu and operational initiatives • Spending anticipated to be on employee and customer safety modifications • Initial declines in service revenues are recovering as restaurant restart and traffic improves NEW BUILD 26% REPLACEMENT & UPGRADE 49% www.middleby.com 11

Trends in the Foodservice Industry ACCELERATING TRENDS • Added focus on off‐premise (delivery, carry out and drive‐ through) • Focus on menu simplification, throughput and space utilization • Growth in non‐traditional foodservice like retail and c‐store • Labor will continue to be a primary challenge • New foodservice models will continue including modular, ghost and cloud kitchens MIDDLEBY VENTLESS • Remote monitoring and automation MODULAR AUTOMATED IOT CONNECTED SOLUTIONS PICK UP CABINETS KITCHEN • Safety protocols for employees and customers • Continued demand trends in healthcare and assisted living MIDDLEBY SOLUTIONS • Middleby ventless kitchens for non‐traditional and space savings • Development and launch of Open Kitchen • Middleby modular and ghost kitchens • Data intelligence and automation solutions • Middleby advanced controls • Middleby touchless and automated Pick‐Up Cabinets (PUC) MIDDLEBY MODULAR INDUCTION‐ HEATED MIDDLEBY’S NEW HIGH‐ • Focus on integrated solutions for targeted segments including AND GHOST KITCHENS DELIVERY SYSTEMS LEVEL USER INTERFACE retail, c‐stores, healthcare and emerging chains Over the past year Middleby has made significant dedicated investments in R&D to focus on technology initiatives, solutions for industry trends and invested in targeted growth segments. As a result we are well www.middleby.com positioned with solutions to address these needs that will accelerate as a result of COVID-19. 12

COVID‐19 Residential Impacts – Appliance Sales Residential sales are sequentially improving week over week since the AHAMAHAM 20202020 FULLFULL YEARYEAR INDUSTRYINDUSTRY FORECASTFORECAST OFOF UNITUNIT SHIPMENTSSHIPMENTS (in April lows and are expected to thousands) recover in second half. Residential sales are quickly returning to pre‐COVID levels: • On‐line dealers performed well during Q2 • Traditional dealer and retail showrooms began to re‐open in June further bolstering business and improving the outlook for Q3 • Outdoor segment experiencing growth with consumers staying home and cooking outside • Home sales have remained resilient and consumer investments in home improvement projects continue to gain momentum • The UK market is more heavily impacted than the USA, but is demonstrating significant improvement in July Numbers in thousands www.middleby.com Source: Association of Home Appliance Manufacturers 13

COVID‐19 Residential Impacts –Home Sales TOTAL EXISTING HOME SALES % CHANGE YEAR OVER YEAR Domestic home sales and new home starts have steadily improved over the recent months since the onset of COVID. • Existing‐home sales continued on a Source: National Assn. of Realtors strong, upward trajectory in July, marking two consecutive months of significant sales gains, according to the National Association of Realtors®. NEW HOME CONSTRUCTION • Home sales as a whole rose year‐over‐ year, up 8.7% from July 2019. 1800 250 Number 1617 and 1600 1587 1567 1496 200 Started • Building permits rose 9.4% over July 1400 1377 1371196 1340187 1274 182 1269 181 181 of 1200 1235 1212170 167 172 176 166 171 1220 162 163 2019 and posted a 19% increase over 159 150 Permits 1000 1038 934 (in Authorized June, 2020. 800 thousands) thousands) 100 600 Auhtorized, • New home starts rose 23.4% over July (in New permits approved Permits 400 2019, and reported a 22% increase 50 of New home starts 200 over June 2020. Started 0 0 not Number www.middleby.com 14 Month Source: United States Census Bureau

Middleby Revenue Composition – Residential Trends CONSUMER SPENDING Residential Sales • Growing trend of outdoor cooking and family entertaining during COVID Other & Non‐Core 10% • Heightened interest and demand for Outdoor 12% new appliances due to meals prepared at home and consumers with time to review products online • Order‐in, pick‐up and food delivery trends resulting in more warming at home. Trends evolving around meals prepared with food items prepared both inside and outside the home brought together Refrigeration 30% • Launching new home projects and remodels due to continuing work‐at‐ home and school‐at‐home trends Cooking & Ventilation • Increasing demand for new 48% refrigeration to fill the consumer need for larger capacity units • Rising demand for appliance service due to greater residential equipment utilization www.middleby.com 15