The Middleby Corporation

Good day, and welcome to the Middleby Corporation first quarter 2023 conference call. With us today from management are Tim Fitzgerald, CEO, Brian Middleman, CFO, James Poole, Chief Technology and Operations Officer, and Mr. Steve Spittel, Chief Commercial Officer. Management will begin with opening comments, and then we will open the call for questions. Instructions to enter the queue will be given at that time. Now I'd like to turn the call over to Mr. Fitzgerald for his opening remarks. Please go ahead, sir.

Good morning, and thank you for joining us today on our first quarter earnings call. As we begin, please note there are slides to accompany the call on the investor page of our website. We are pleased to have posted solid results to begin the year, reporting a first quarter with strong performance both at our commercial and food processing businesses. While our residential business was expectedly impacted by challenging market conditions and destocking of inventories at our retail partners, In the quarter, we drove improved profitability, and we continued to make progress towards our longer-term margin targets through focus on profitability of our sales mix and with further improvements yet to come through efficiency gains and supply chain initiatives. During the quarter, we were pleased to have also realized meaningful reduction in production lead times across most of our businesses as we benefit from improvements in our supply chain and through the investments made across our manufacturing operations. We are now in a significantly improved position to better serve our customers and take advantage of market opportunities. To start the year, we continue to have strong engagement with our channel partners and customers across all three of our food service businesses with interest in our latest products and innovations offering benefits focused on energy, labor, speed, and sustainability. The investments made in our innovation centers demonstrating these latest solutions have proven to be a strategic asset for our businesses. The traffic in these showrooms continues to increase as we invest heavily in training with our channel partners as our world-class culinary teams engage hands-on with customers looking to evolve kitchen and food service operations. We're excited to have recently opened our latest Middleby Innovation Kitchen in Spain, now providing a resource to our partners and customers throughout Europe. In the quarter, we also continue to make strategic and financial investments in our business, investing $25 million in our manufacturing operations as we continue to retool our operations to support new product launches, increase capacity, and advance the automation within our operations. We repurchased $48 million of Middleby shares during the quarter, and we're also excited to complete the acquisitions of Flavours and BlueSpark. adding to the innovation in our beverage portfolio and expanding our in-house controls development capabilities. As we've progressed into 2023, economic conditions continue to present challenges and uncertainty, particularly as it relates to our residential segment. But we remain excited about the direction and long-term goals and confidence in the investments and strategic initiatives underway that are enhancing the competitive positioning for each of our three food service businesses. Now I'll pass it over to James to spotlight our exciting recent product innovations, which are also highlighted in our investor slides. James.

Thanks, Tim. We have a few items to cover, so I'll jump in today with the FryBot. If you've heard me speak on other calls, you know that I'll often talk about the digital, embedded, and collaborative automation that's driving innovation across Middle Beach. FryBot brings these together in a complete Middle Beach solution. It is the only automated fryer designed, manufactured, and integrated by a single company. From the collaborative robot to the dispenser fryer, holding, and spice bot, the FryBot is 100% middleweight. The base FryBot, as shown, is capable of autonomously dispensing, frying, and seasoning two unique items at rates hitting 65 baskets per hour, depending on product. The Frybot will align with ease of installation, meaning it can easily be rolled out to new, but most importantly, existing restaurants. The Frybot is currently in test with leading brands. We look forward to continued Frybot installations and test locations in 2023, with Frybot hitting revenue-producing stores in 2024 and 2025. If you'd like to see and taste the Frybot in action, It will be on full display at the NRA show in May in the Middleby Automated Burger and Chicken Bar, as well as in the NRA's Kitchen Innovation Pavilion. At the NAPIM show this past February, the FryBot flawlessly delivered over 1,500 orders of fries and chicken in just over two days. Continuing with the NRA show, the FryBot will be accompanied by Catfish Tavern, a concept created by John Tapper that features an all-electric and all-needless Middleby kitchen. The Middleby Cafe, a concept that's fencing the highest quality espressos and drip coffees from the Middleby Coffee Group, the best baristas and best roosters in the Chicago area. Open Kitchen, Middleby's enterprise IoT platform. Middleby's electrified innovation alley. where we will showcase the latest electric products designed for the efficient electrified kitchen. And lastly, please look for the Hydro Rinse and the Pressure M2, additional KI award winners in the Kitchen Innovation Awards Pavilion at the NRA show. Hydro Rinse automates the cleaning of most soft-serve machines by washing, rinsing, and sanitizing the machines while the machines are still assembled. The Plextor M2 is the latest modular and rapid cook and accelerated cooking platform from Turbo Chef. I would like to close by talking a little bit about Blue Spark, our latest acquisition. Blue Spark adds to Middle Beach's common control strategy by helping our brands develop and launch controls faster than ever before, thus accelerating new product development across commercial, residential, and food processing groups with industry-recognized capabilities in the area of UX, UI design, and embedded firmware and firmware development. BlueSpark also brings fast PCB board manufacturing while also being able to support volume production. We are excited to have BlueSpark developing for Middleby. Thank you, and over to you, Brian.