The Middleby Corporation

Thank you for joining the Middleby Second Quarter 2023 conference call. With us today from management are CEO Tim Fitzgerald, CFO Brian Middleman, Chief Operating and Technology Officer James Poole, and Chief Commercial Officer Steve Spittel. We will open the call with management comments and then open the lines for questions. Directions on entering the queue will be given at that time. Now I'd like to turn the call over to Tim Fitzgerald. Please go ahead, sir.

Good morning, and thank you all for joining us today on our second quarter earnings call. As we begin, please note there are slides to accompany the call on the investor page of our website. We're pleased to have posted solid results, reporting a record second quarter with strong performance at both our commercial and food processing businesses. And we continue to progress our residential business while it is impacted by the challenging market conditions and destocking of inventory at our channel partners. We posted overall improved profitability during the quarter and continue to make progress towards our longer towards margin targets. Our profitability is benefiting from our focus on new product innovation to drive improved sales mix. We are realizing efficiency gains reflecting the impact from our manufacturing investments and we are focused on longer term supply chain opportunities with ongoing product design and sourcing initiatives providing for greater improvements over the next year. While market conditions have proven to be challenging, particularly in the residential segment, the inventory destocking, which has impacted the first half for our commercial and residential businesses, we believe will largely be normalized by the end of the third quarter. And we continue to have strong engagement with our customers across all three of our food service businesses. Our new product introductions have accelerated over the past several years as we target growing market trends and launch game-changing innovations addressing customer challenges of labor, speed, energy, food waste, and sustainability. In our commercial food service segment, we've expanded our electrified and bentless cooking solutions, developed new and exciting ice and beverage offerings in a large addressable market, and established Middleby as a leader in controls, IoT, and automation solutions, positioning ourselves to capture the future of the industry. At residential, we have significantly broadened our portfolio of indoor and outdoor premium brands with industry-leading designs, a pipeline of innovation addressing the growing demand for energy-efficient electrified products, and with initial launches of connected equipment with more to come. At food processing, we have executed on our strategy of becoming a leading provider of full-line integrated and automated solutions. for the protein and bakery markets while successfully expanding in new markets such as bacon, cured meats, alternative protein, and pet food. Through our substantial go-to-market investments, we're creating greater awareness for our brands, product portfolio, and the latest innovations with a growing pipeline of customer opportunities. The investments we have made in our innovation centers have proven to be a strategic asset for our businesses The traffic at our commercial, residential, and food processing showrooms continues to increase. We now have a total of eight innovation centers. We have invested heavily in training with our channel partners, and our world-class culinary teams are engaged daily with hands-on customer demonstrations. We are realizing the benefits from deepened relationships with our sales partners and have developed important new customer wins, demonstrating the value of these strategic investments. We're excited to have most recently opened our flagship residential showroom in Chicago, featuring the latest designs and innovations across our entire indoor and outdoor Middleby brand portfolio. Since our June opening, we have quickly booked the calendar with customers discovering all that Middleby Residential has to offer. We're confident these investments of today are translating into the early chapters of a long-term impact and growth trajectory for all our food service brands. In the quarter, we also completed several acquisitions with the additions of BlueSpark and Filtration Automation. BlueSpark expands our software development and in-house controls manufacturing capabilities, extending our lead in digital controls and IoT, an area we're confident will provide Middleby with a clear competitive advantage as automated digital solutions are implemented in the commercial kitchen. While filtration automation furthers our strategy of developing best-in-class full-line automated solutions, adding a patented oil filtration technology providing our customers with operating cost savings and improved food quality with our now expanded frying solution. In early July, we also completed the acquisition of Terry Water Solutions. The Terry chemical-free biodegradable water filter solution provides for improved equipment performance reduced maintenance, and consistency in food quality, along with ice and beverage. The combination of the Terry water solution with our portfolio of food, ice, and beverage equipment provides for a better customer experience along with significant growth opportunity in a sizable and attractive after-sales market. And just last week, we announced our most recent acquisition of Tradewind, a manufacturer of residential ventilation complementing our portfolio of indoor and outdoor cooking brands with an expanded offering of unique designs and custom ventilation solutions. Our critical strategic investments in innovation go to market capabilities and acquisitions, continue to build upon our competitive positioning in the marketplace, and further strengthen each of our three industry-leading food service businesses. Now I'll pass over the call to James to spotlight more on some of our most recent product launches that address the growing electrification trends and the demand for automation in the kitchen. These new product innovations are also highlighted in our investor slide deck. James.

Thank you, Tim. Today we'll discuss some exciting developments in our product lineup, focusing on sustainability and electrification in the residential space. Locker New, Rangemaster, AGA, Novi, and Viking have recently launched or are launching a full suite of induction products for homes. These offerings provide our residential customers with the same benefits that our commercial customers rely on today, safety, speed, precision, performance, and sustainability. Additionally, Cook Tech, one of our commercial brands, is introducing a few unique products for the residential use, such as a drop-in induction walk. Middleby is also proud to bring the most extensive lineup of induction range tops and ranges to the market with designs ranging from classic French to strong American commercial. And Novi is introducing an innovative undercounter product called the Invisible Hob, which allows users to cook directly on their countertops. As before, you can find these new products in our investor deck. I've also included a slide that compares the benefits of induction versus electric and gas cooktops, highlighting the near-perfect efficiency that induction yields, along with a brief explanation on how induction works. Now, let's revisit a highly successful product that continues to gain traction in the commercial space, the Taylor Next Gen Grill. While it has been the griddle of choice for a few high-volume, quick-service restaurants for the past couple years, the general market introduction of the next-gen grill continues to generate strong interest and adoption among our customers, especially those who have had the chance to come experience the grill's capabilities firsthand at our Middleby Innovations Kitchens automation pod at NAFM and the NRA shows. The next-gen grill brings embedded automation through active compression cooking, allowing for cooking from both sides simultaneously. With its continuously variable gap control, this innovation, this innovative cooking method offers next-generation precision. The next-gen grill can control its platen gap or compression with an accuracy of five thousandths of an inch and a platen parallelism within 10,000ths of an inch. This level of precision enables our customers to achieve consistent cooking back to front and side to side, dramatically improving consistency and reducing cook times up to 80%. Furthermore, this automation significantly improves food quality by reducing instances of over or under cooking, thereby ensuring safer offerings and minimizing food waste. ultimately enhancing our customer profitability and consumer satisfaction. Before I conclude, I'd like to give you a glimpse of what's coming up. In the next quarter, we will focus on new products slated for launch in Q4 and Q1 of 2024. Expect exciting introductions such as a rapid-cook oven from TurboChef, a groundbreaking frying innovation from Pitco, and a new residential platform from Viking consisting of cooking, refrigeration, dishwashing, and built-in accessories. Thank you, and now I'll pass it over to Brian.