Middleby Corp. (NASDAQ:MIDD) Q3 2019 Earnings Conference Call Transcript

Nov 06, 2019 • 11:00 am ET

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Middleby Corp. (NASDAQ:MIDD) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Thank you for joining us today for the Middleby Corporation Third Quarter Conference Call. With us today from management are CEO Tim Fitzgerald, CFO Bryan MIttelman, and COO David Brewer. We will begin the call with comments from management then open the line for questions. Instructions on how to get in the queue will be given at that time.

Now I will turn the call over to Mr Fitzgerald. Please go ahead, sir.

Executive
Tim Fitzgerald

Good morning and thank you everybody for joining today's call. I've got some initial comments about the quarter and then I'll turn it over to Brian. In the third quarter, it was a challenging across all of our business segments. For a variety of reasons, despite the current headwinds, we remain optimistic, because of the significant progress made on our long-term initiatives during the quarter. These important sales and profitability programs that we are currently putting in place are a solid foundation for our future growth. We expect many of these strategic initiatives to be an effect by the end of this year and expect to reap the benefits in 2020 we continue to work on expanding margins and improving operations, price increases were put in place in the third quarter to offset increased tariffs and material costs along with updated product pricing, we implemented additional profitability initiatives including headcount reductions and other SG&A cuts during the third quarter these profitability initiatives include the effort to drive margins are recently acquired businesses as we adjusted to current market conditions. To continue, we continue to consolidate manufacturing facilities, which I discussed on our previous call, combining like companies will bring efficiency through manufacturing and workforce synergies. Our current efforts include consolidation of three facilities, which should bring in excess of $15 million of savings in 2020. We are moving to of the brands acquired from Standex business early earlier in this year into our existing fryer and oven facilities these integrations will not only allow us to expand margins, but position these brands for long-term profitable growth.

Additionally, we have largely completed the consolidation of our outdoor cooking lines within the Viking Greenwood, Mississippi campus. The teams are doing a great job with these facility moves, making them seamless, quick and with our customer disruption. We also continue to focus our efforts on the integration of our newly acquired companies to bring those to our target margins and portfolio average. We have acquired 13 companies and 16 brands since the beginning of 2018. Our margins for those companies that we've acquired prior to 2017 are significantly higher, as acquisitions for the most part are dilutive to our margins for the first several years, and currently represent approximately 2% drag on our overall EBITDA margins. Despite the drag on the margins, we realized margin expansion at these businesses individually and we'll continue to execute on integration plans, which will continue to drive margins to the Company average consistent with what we have done successfully for many years.

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