Investor Presentation October 2006
Forward Looking Statements made in this presentation or otherwise attributable to the company regarding the company's business which are not historical fact are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cautions investors that such statements are estimates of future performance and are highly dependent upon a variety of important factors that could cause actual results to differ materially from such statements. Such factors include, but are not limited to variability in financing costs; quarterly variations in operating results; dependence on key customers; international exposure; foreign exchange and political risks affecting international sales; changing market conditions; the impact of competitive products and pricing; the timely development and market acceptance of the company's products; the availability and cost of raw materials; and other risks detailed herein and from timeto-time in the company's SEC filings. 1
Company Overview
Middleby Investment Highlights ¾ Market Leader − Established and well-respected brands and leader in the commercial cooking industry − #1 or #2 market position in U. S. across most product lines − Introducing 10 -12 new, technologically-advanced products every year ¾ Well-Positioned for Continued Growth − − Strong pipeline of new differentiated products Premiere customer base for replacement market Proven acquisition strategy and integration Infrastructure in place and well-positioned for quickly-growing international markets ¾ Experienced, Proven Management Team − 12+ record quarters − Successful record of growth organically and through acquisitions − Strong profitability and commitment to operations excellence 3
Market Leader We are focused on the hot-side of the foodservice equipment industry 1. The U. S. commercial cooking equipment market is ~$1. 5 B. U. S. Hot-side Foodservice Equipment Market by Product (1) 2. The International commercial cooking equipment market is $1 B. 3. The Middleby focus is the hot side – Most important piece of equipment in the restaurant and critical the success of the restaurant. – Equipment specification and purchasing decisions driven by chef / operator – Product pricing driven by differentiated technology ______________ 1. Source: North American Association of Food Equipment Manufacturers and management estimates. 4
Market Leading Brands Brand Product U. S. Market Position Representative Customers n Conveyor Ovens #1 n Papa John’s, Pizza Hut, Domino’s, Costco n Fryers #2 n KFC, Dunkin’ Donuts, Mc. Donald’s, Taco Bell n Convection Ovens #1 n KFC, Burger King, Cracker Barrel, Cheesecake Factory n Ranges #2 n Morton’s, Wendy’s, Bob Evans n Charbroilers #1 n Outback Steakhouse, Applebee’s, Culver’s We succeed due to strong brands, product innovation, service and support and our continuous commitment to quality ______________ Source: Management estimates. 5
Market Leading Brands (con’t) Brand Product U. S. Market Position n Restaurant Baking Ovens #1 n Subway, Bob Evans n Warmers n Toasters #1 #2 n Wendy’s, KFC, IHOP Mc. Donald’s, Chick-fil-A #2 n Sara. Lee, Smithfield n Food packaging equipment #2 n Kraft, Hormel n Combi-ovens Ovens N/A n Fast-growing European markets n Food processing ovens Representative Customers We succeed due to strong brands, product innovation, service and support and our continuous commitment to quality ______________ Source: Management estimates. 6
Middleby Brand Products We offer a comprehensive line of innovative cooking equipment Conveyor Oven ¾ Automated oven with energy management system Range ¾ Non-clog burner and water proof controls Combi Oven Convection Oven ¾ Combination steam and ¾ No-turn bake capabilities Fryer ¾ Highest efficiency burner convection in one cavity Infrared Broiler Steamer ¾ Used by the best ¾ Boilerless, no-lime steamer steakhouses in the world Baking Oven ¾ V-air technology cooks bread in less than 15 minutes 7
Strong Relationships with Premier Customers n Blue-chip, customer base n Long standing relationships n Limited customer concentration n Large installed base n Serve all food segments 8
Middleby Sales Growth Drivers § New Products § Acquisitions § Replacement Market § International Sales
1) Sales Growth Drivers—New Products The Middleby brands introduce 10 -12 new products every year. By listening to our customers, new products are then developed to meet their needs and satisfy industry trends such as energy savings and speed. Energy Savings Speed § WOW! Oven § Rocket Fryer § Bakery Ovens § Hydrovection § Strato Steam § Cyclone Oven § Flash Pasteurization 9
Growth Drivers—Middleby R&D Disruptive Design Brand Extension Catalyst Design Strategic Market Transformation Designs that reinterpret existing categories with features and benefits Value to bottom line of customers Benefit: Sales Growth Benefit: Customer retention and brand image Benefit: Improved Profit Margins WOW Oven Rethermalizer 10 Strato. Steam
2) Sales Growth Drivers—Acquisitions Two New Middleby Platforms Combi Ovens Food Processing and Packaging $400 million market $600 million market $40 million $10 million $20 million 11
Recent Acquisitions Alkar Rapidpak acquisition allows expansion of customer base into food processing, Denmark-based Houno brings to Middleby European manufacturing and technology. § Acquisition Criteria: – Leading Brands – Patented Technology – Focused on Cooking Recent Acquisitions Rationale n Alkar and Rapid. Pak: Broadened product lines and customer base to expand cooking for food processing industry. Benefit from precooked and “ready to eat” trends as fewer meals are prepared at home n Houno: Gives Middleby a strong presence in quickly-growing European markets. n Both: Opportunities to transfer technology across companies Integration Initiatives n Technology Transfer n SKU rationalization and Product Pricing n Cost Reduction and Purchasing Savings 12
Successful Acquirer Transforming Blodgett acquisition; compelling Nu-Vu acquisition in 2005 ¾ Blodgett a key strategic acquisition − More than doubled size of company − Integrated and refocused on strength of brands − Successful new product launches ¾ Post-Blodgett integration, we continue to be opportunistic − Nu-Vu acquisition presents great opportunity − Foodservice equipment industry remains fragmented Blodgett Acquisition Nu-Vu Acquisition Rationale n Broadened product lines to provide more complete range of hot-side foodservice equipment n Better positioned us with fast growing segments of foodservice industry Achievements and Synergies n Rationalized headcount n Consolidated manufacturing facilities n Refocused business on core products n Acquired in January 2005 n Leader in baking ovens and proofers n Fills gap in product line n Complementary technologies provide further ability to innovate Synergy Opportunities n Cross-selling to be realized n Manufacturing / productivity improvements 13
3) Sales Growth Drivers—Replacement Market § Middleby Marshall Conveyor Ovens § Convection Ovens § Transfat filter oil fryers § Stratosteam Gas: boilerless 14
4) Sales Growth Drivers—International Market § Local chains § Specifically designed product for regional specifications § Reorganization of Middleby Worldwide 15
Unique Global Footprint Global presence through sales, service and manufacturing in key international markets Bilbao, Spain Manchester, UK Delhi, India Seoul, South Korea Net Sales by Geography Shanghai, China Mississauga, Ontario, Canada Manila, Philippines Mexico City, Mexico Manufacturing facility, sales office and test kitchen Taipei, Taiwan Sales office with test kitchen Sales office only Key Advantages ¾ Test kitchens throughout the world allow us to educate customers of the benefits of our equipment through hands-on experience and training ¾ Worldwide service is critical and highly valued by U. S. chains expanding into international markets ¾ Worldwide sales infrastructure allows direct contact with key decision makers, especially in high-growth Asian markets ¾ Philippines manufacturing provides regional presence in high-growth Asian markets and low-cost manufacturing capabilities for U. S. market 16
Profit Growth Drivers Supply Chain § $100 Million § Outsourcing to China § Reverse auctions Higher Margin Products § WOW § 500 Range Plant Efficiencies § Plant Operating Rationalization: consolidation of Toastmaster and Nu-Vu § Move high labor process to the Philippines 17
Financial Review
Financial Overview ($ in millions) Middleby Financial Performance New management team in place Blodgett acquired in December 2001 Middleby operations restructured Blodgett operations restructured 19 Jan 2005 Nu-Vu acquired Dec 2005 ALKAR acquired Aug 2006 Houno acquired
Track Record of Growth Historical Net Sales . 9% GR =9 CA 21
Focus on Profitability ($ in millions) Historical Gross Profit and Margin Historical Operating Income and Margin Focus on Margin Improvement ______________ Note: 2004 operating income and margin exclude stock repurchase transaction expenses of $12. 6 million and acquisition integration reserve reversal of $1. 9 million. See the Company’s 10 -K for further disclosure. 22
Operating Strategy We have achieved success due to our focus on our core management philosophy § Decentralized operations § Incentivizing employees on financial performance goals § Achieving engineering and R&D excellence § Driving operational efficiencies Proven Results ü Product standardization − Significant improvements in productivity ü Focus on higher margin products − Eliminated less profitable product lines ü Improvement in capacity utilization − Strategic shifts in manufacturing and through reduction of man hours ü Material cost initiatives − Reduction of suppliers / improved production sourcing ü Utilization of low-cost facility − Increased utilization of Philippines ü Plant consolidation and headcount reduction − Successful integration of acquisitions facility for U. S. component manufacturing 23
2006 First Half Review Results Commentary (Amounts in millions, except per share data) YTD Q 2 2006 Net Sales Q 2 2005 $ 201. 6 % Growth Gross Profit ¾ Net Sales increased 27% in 1 st half YTD % Margin − 18. 0% acquisition growth $ 158. 8 27. 0% $ 77. 2 − 9. 0% organic growth ¾ Gross margins impacted by: 17. 3% − Benefit of increased volume and production efficiencies $ 59. 7 38. 3% 37. 5% − Increased steel and other material costs SG&A $ 41. 8 % Sales $ 31. 3 20. 7% − Impact of acquisitions 19. 7% ¾ Operating costs impacted by: Operating Income $ 35. 4 % Sales $ 28. 3 17. 5% Interest Expense, net $ Net Earnings $ 19. 1 Diluted EPS $ 2. 32 $ 1. 91 8. 2 $ − Higher commissions due to increased sales $ 15. 3 Weighted Avg Shares 3. 8 − Impact of acquisitions 17. 8% 3. 5 − Rising interest rates 8. 0 24
Financial Themes ¾ Top Line Growth − Positioned in faster growing segments − Continued new product innovation − Impact of acquisition ¾ Focus on Operating Margins − Standardization of product platforms − Strategic supply chain initiatives − Integration of Alkar ¾ Strong Balance Sheet − Continued debt reduction − Capacity to pursue strategic acquisitions 20
Key Investment Highlights 1. Market Leader on Hot-Side of Foodservice Equipment 2. Established Well-Respected Brands 3. Premier Customer Base 4. Positioned for Growth 5. Unique Global Footprint 6. Strong Profitability and Commitment to Operational Excellence 7. Successful Track Record of Growth through Acquisitions 8. Experienced and Proven Management Team 25
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