The Middleby Corporation Q4 2007 Earnings Call Transcript

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2008-03-10 09:25:09.0

Tags: Middleby Corp.

Question-and-Answer Session

Operator

(Operator Instructions)

Your first question comes from Peter Lisnic of Robert W. Baird.

Peter Lisnic - Robert W. Baird

Good morning, Tim. Good morning, Selim.

Tim FitzGerald

Good morning.

Selim Bassoul

Good morning, Pete.

Peter Lisnic - Robert W. Baird

Tim, I guess if I could start with you, on the topline growth that you saw in the quarter, the 12% organic, can you help us understand how your organic growth accelerated? I'm sure part of it was impacted by the work stoppage at Elgin, any sense as to how much that added? And can you maybe give us a better sense as to what maybe a core organic growth number was for the quarter?

Tim FitzGerald

Well, as I mentioned, if you breakdown the two pieces, 9.4% was the growth at the Commercial Food Service, but that was largely driven by international. So domestically we had growth of 3%, internationally it was 33%. So the domestic growth didn't have any impact of the kind of catch-up from the work stoppage. But internationally, there was some impact there. But even excluding that, we would have had international growth in excess of 20% for the quarter.

The Food Processing side of the business, I mean the growth was very strong, obviously, up 28%. We don't except that type of growth going forward. But during the course of end of '06 and the first half of '07, we had negative growth at that business unit because we had increased pricing and streamlined some of the lower margin products. So, we've kind of moved out of that negative comparison and saw a strong pickup in the fourth quarter because we were comparing to a weaker fourth quarter. But even beyond that, we had strong sales in the fourth quarter. So it would have been double-digit growth for that Food Processing Group in the fourth quarter.

Peter Lisnic - Robert W. Baird

Okay. And then I guess on the international side, is that essentially a function of the chains sort of growing overseas, or is it more just that your product is more price competitive because of what's happening with currency? How do we kind of break apart or decipher the growth that you're generating internationally?

Tim FitzGerald

I wouldn't say one was a whole lot stronger than the other. I think it's a combination. I mean really it's the three factors that I mentioned. The emerging markets, we had strong growth in China and some of the other expanding markets. So that added quite a bit. We've seen sales growth in Europe. I would say that the growth that we've had in Europe is driven by the competitiveness of our product on pricing. Then I also mentioned that with Houno, which is lumped into the international sales there, we had very strong growth out of that business unit as well. And that was due in part to the new product line that we introduced in the fourth quarter.

 

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