The Middleby Corporation

Ladies and gentlemen, thank you for joining us for the Middleby Corporation fourth quarter 2021 earnings conference call. With us today for management are Tim Fitzgerald, CEO, Brian Middleman, CFO, James Poole, Chief Technology and Operations Officer, and Steve Spittel, Chief Commercial Officer. We will begin the call with commentary from management and then open the lines for Q&A. Instructions on how to get in the queue will be given at that time. Now, I would like to turn the call over to Mr. Fitzgerald for his opening comments. Please go ahead, sir.

Thank you for joining us today on our fourth quarter earnings call. As we begin, please note there are slides to accompany this call on the investor page of our website. I'm proud of the results our team delivered to finish the year. Financially, we posted all-time records in revenues and earnings for 2021. returning us to our trend of consistent growth following the pandemic year of 2020. I'm particularly proud of the effort it took to deliver those results. While the effects of COVID have continued, we have also faced the challenges of inflationary pressures, along with the extraordinary supply chain disruptions that have impacted our business on a daily basis. Our Middleby teams have made a tremendous effort in 2021 to navigate these challenges and strive to do the best every day for our customers. Thank you to all our team members across Middleby for these efforts and all that you delivered in 2021. We are in exciting times for the food service industry as customers are looking for new solutions to new challenges. Labor availability, rising food costs, rapidly changing consumer trends, the increased focus on sustainability, and an evolving digital world all present a changing landscape and future opportunities for our business. And we are investing for this future. In 2021, we have had many new innovative product launches addressing the evolving needs of our customers. Some of these launches we have previewed in prior quarter calls, such as our next gen Taylor automated grill, the Plexer rapid cook platform, and the Alcar high speed oven with Turbo Chef technology for food processing operations. In 2021, we've also significantly progressed company-wide technology initiatives focused on controls, automation, and our open kitchen IoT platform. These strategic investments will benefit all three of our food service businesses and uniquely position Middleby to support the growing demand for minimized labor, operational efficiency, and utilizing data in the kitchen. As we bring new technologies to market, it is more important than ever to evolve our engagement with our customers to educate, demonstrate, and validate the operational benefits of these solutions. The investments we have made in our innovation centers supporting all three of our segments are providing to be invaluable resources and enabling us to accelerate the introduction of our latest innovations into the marketplace. And despite COVID, in 2021, we have had a record number of hands-on engagements with customers and channel partners. In 2021, we also made great strides progressing our digital strategies to increase awareness for our brands, products, and latest innovations. Our investments in digital marketing and sales tools are allowing us to reach new customers, rapidly educate our sales partners, and expand interest for the many solutions across our Middleby brands. In 2021, we also continued our long-standing track record of strategic acquisitions, building upon our three industry-leading platforms. We furthered our commercial food service platform with the addition of Imperial Range, a leading brand of cooking equipment, and Newton, a highly innovative dispensing technology, bolstering our growing beverage platform. We furthered our automation initiatives, investing in productive robotics, supporting the launch of our FryBot and PizzaBot solutions. And we added four new exciting brands to our residential platform, including Novi, Kamado Joe, Masterbuilt, and Char-Driller, expanding both our indoor and outdoor offerings, while almost doubling the size of our residential business. Operationally, we remain focused on delivering for our customers, We enter the year with a record backlog and continued supply chain challenges. To address this, we have invested in inventory, people, manufacturing equipment, and facility expansions. And our supply chain teams continue to work actively to minimize disruption and increase supply. It remains difficult to predict the cadence of our increase in production capacity, but we expect consistent improvement as we progress through this year. While we address the challenges of the current operating environment, We continue to execute on the initiatives to expand margins and remain committed to our long-term profitability goals. We are pleased with the strong levels of profitability we achieved across all three of our business segments this year as we navigated the dynamics of the current inflationary environment. We continue to progress our initiatives to realize platform synergies and evolve our portfolio of sales as we shift mix to higher technology offerings. As we look forward, we're optimistic about the landscape for our markets in the year ahead. The restaurant industry is in recovery. Categories such as casual dining, institutional, and travel and lodging are joining the recovery we've seen in categories such as quick serve, pizza, and fast casual. And our customers in all segments are making strategic investments in their food service operations like never before. At our residential business, both new home starts and existing home sales continue to be robust and well ahead of 2019 pre-COVID levels. These favorable housing dynamics, along with increased time spent at home, continue to support new kitchens and remodels, presenting a favorable backdrop to the market in 2022. The food processing industry is in a period of investment with need for equipment to increase capacity, address operating challenges, and launch new food items. and we are poised to capture new trends in faster growth categories and provide unique offerings with our full line and automated solutions. Now I'll pass the call over to James to comment on some of the technology initiatives in Spotlight and other recent product innovation highlighted in our investor slides.

Thanks, Tim. Over the past year, we've shared some great examples of MPIs that will be launched in 2021. As a reminder, these products can be found in supplemental debt provided for this call. We introduced technologies from our automated frying solution, the FryBot, to our latest highly efficient multi-zone food processing oven, the Turbo Chef by Alcar, to recall a couple. Middleby continues to deliver meaningful innovations at the brand level and collaboratively across the brands. As we look at new product introductions, NPI, our brands focus on more than making the best and efficient coffee, espresso, ice cream, burger, pizza, et cetera. They focus on the best possible platform with sustainability at the forefront of the innovation. Greenhouse neutral materials, packaging, water, gas, electrical consumption, food waste, automation, operator safety, to name a few, are all facets of the design that our engineers continue to focus on. The Chivo Plus by Linkat is no exception. The Chivo Plus is Middleby's latest cooking innovation. The Chivo Plus was developed to deliver a new and highly flexible, sustainable cooking platform to address all market segments looking for a flexible, green cooking solution. The Chivo Plus has enjoyed much success in the UK, from retail chains to pub chains, and many more general market venues. The Chibo Plus is ready to launch internationally, where it will target emerging markets due to its very low energy consumption and low input power. At the core of the innovation are four unique heating mechanisms that work independently to maximize cooking flexibility. Convection, radiant, microwave, and conduction define the technology and are at the root of this new innovation. In particular, the radiant conductive base is the first of its kind and provides unique finishing capabilities. And as with all new Middleby innovations, the Chibo Plus is compatible with open kitchen. We look forward to the great growth that the Chibo Plus will bring LinkCat and Middleby. And now I will turn it over to Brian.