The Middleby Corporation

Good morning and thank you for joining us for the Middleby second quarter conference call. With us today from management are Tim Fitzgerald, Chief Executive Officer, Brian Middleman, Chief Financial Officer, Steve Spittel, Chief Commercial Officer, and James Poole, Chief Technology and Operations Officer. We will begin today with opening comments from management. Then open up the call for questions. Directions on how to get in the queue will be given at that time. Now I'd like to turn the call over to Mr. Fitzgerald for opening comments. Please go ahead, sir.

Good morning. Thank you for joining us today on our second quarter earnings call. As we begin, please note there are slides to accompany this call on the investor page of our website. I will start the call this morning with comments on our decision not to counter and further increase our offer on well-built. We continue to stand by our view that the originally accepted offer to acquire Wellbuilt through a merger transaction offered superior value to Wellbuilt shareholders by participating in the ongoing growth of Middleby, along with sharing in the benefits of the combined organization. While on prior calls, we shared our enthusiasm for the transaction, we're even more enthusiastic about the many opportunities we have at Middleby and the growing momentum of our business. As we contemplated the decision of the well before do accept an all cash offer we were unwilling to further increase the consideration of our offer at the expense to our middle be shareholders, particularly in light of the excitement around our standalone business prospects. We remain in an extremely strong financial position that will allow us to make investments support our strategic sales and profitability initiatives. and execute on our long-standing track record of smart, strategic, and shareholder value-enhancing M&A. Although a well-built transaction would have been sizable, we have a considerable pipeline of other strategic acquisition opportunities consistent with our history over the past 20 years. These opportunities will provide a higher return to our shareholders as we continue to successfully build our business for the long term. Now, as it relates to the quarter, we continue to build upon the positive momentum across all three of our segments, investing in technology and product innovations addressing market trends, furthering our strategic sales initiatives, and adding to our brand portfolio with strategic acquisitions. We remain focused on evolving our business to meet increasing customer expectations and rapidly changing industry dynamics. While we execute our strategic initiatives, We also continue to make progress against our financial goals. We posted improvements in EBITDA margins at each of our three business segments, all in excess of 20% and all exceeding pre-COVID levels of 2019. While we face near-term pressures with massive supply chain disruption and material cost increases, we remain committed to our long-term profitability targets as we drive profit improvement through acquisition integration initiatives manufacturing and supply chain activities, and improvement in the mix of product sales as we promote higher technology solutions. As we move into the second half of 2021, we continue with our optimism around market demand and the strength of our positioning in each business segment. For our commercial food service business, the restaurant industry remains disrupted but continues to improve, and our customers are making strategic investments in their food service operations. leading to greater acceptance of new technologies to address rapidly changing consumer trends and the increased operating challenges, most importantly, the availability of labor. At a residential business, new home starts continue to be robust while strong existing home sales and increased time spent at home is supporting kitchen remodels. These conditions support a continued favorable backdrop to our business for the year and carrying into 2022. We're excited to have debuted our newest residential showroom located in Dallas, Texas. This showroom is tied to our Middleby Innovation Kitchens and demonstrates the crossover of product innovation at our commercial and residential businesses, bringing to life our differentiated ability to offer professional restaurant innovations in the home. We're also pleased to have recently announced the latest addition to our residential brand family with the acquisition of Novi. Novi brings a premium line of built-in cooking and ventilation, featuring performance with a modern European design. Novi is a terrific complement to our existing brands and product offerings. We're excited to welcome the Novi team, and we see significant growth opportunities in the year ahead. At our food processing group, the impact of COVID and travel restrictions will continue to be a challenge to installations and timing of large projects. However, demand continues to increase for our complete solutions offering innovation to address operating challenges, including labor, safety, rising food costs, and sustainability. And we are positioned to address these demands with solutions featuring our new product introductions and acquisitions we've completed over the past several years. Now I'll pass the call over to James to touch on some of the innovation initiatives and most recent product launches highlighted in our investor slides.

Thanks, Tim. We have a lot of terrific innovations happening in each of our divisions day to day. They continue working on the next generation combi, convection oven, rapid cook oven, fryer, espresso machine, processing line, and the list goes on and on, just like the salt. These brand-level innovations will always be a part of our engineering DNA. Beyond this, we are also focused on six initiatives across our divisions to bring much needed labor savings, enhanced efficiencies such as speed of service, and profitability to our customers. They are automation, beverage expansion automation, common controls, IOT, health and safety, and ventless. In today's earning presentation, I've highlighted three new innovations within Middleby to ensure a strong demand pipeline. The first innovation, the Turbo Chef by Alcar, is an excellent example of brand-level collaboration and innovation. This first-of-its-kind thermal processing oven offers our customers a 45% to 90% reduction in processing times across a wide variety of food types by utilizing five unique heating technologies. In addition, the Alphar oven also enhances yields by 2.5 to 5%, which might not seem significant until you consider the tonnage of product that the machine will process over its lifetime. The next innovation is a textbook example of the power of embedded and collaborative automation. The Pizzabot is the first system designed to prepare and process any size or type of pizza to exacting standards, ensuring perfect consistency while substantially minimizing food waste. From the Pizzabot, our collaborative robot takes over and moves the product to an oven for the perfect rapid bake. We are very excited to bring the Pizzabot to market, and while it would have made its debut at the NAFM show, It will be in use and on display at the Middleby Innovation Kitchen and in our customer locations. Finally, I want to introduce our new VentCore product by Evo. This is an exciting innovation in our ever-expanding lineup of ventless products. The VentCore product was designed to turn some of our most aggressive high-temperature cooking systems into ventless systems. The Evo VentCore uses new patent-pending technologies to minimize the reliance on consumables and accessories while improving the cleanability and maintenance of the ventilation system. The vent core was designed to bring all types of cooking to all types of venues. These are just three of the many great innovations we are bringing to the market. I look forward to discussing more in the future. And now to Brian.