Impact of New Initiatives at Viking Reflected in Sales and Earnings

May 12, 2014

The Middleby Corporation, a worldwide manufacturer of equipment for the commercial foodservice, food processing, and residential kitchen industries (including Viking), recently reported net sales and earnings for the first quarter ended March 29, 2014. Net sales at the company’s Residential Kitchen Equipment Group increased by $4.1 million, or 7.0%, to $62.8 million in the first quarter as compared to $58.7 million in the prior year first quarter.

Additional 2014 First Quarter Financial Highlights Include:
• Gross profit in the first quarter increased to $143.0 million from $121.3 million, reflecting the impact of higher sales volumes. The gross margin rate increased to 38.4 percent from 37.0 percent. The increase in the gross margin rate from the prior year reflects improved margins at Viking resulting from integration initiatives implemented during 2013, however, this margin improvement was offset in part by the adverse effect of the Viking distribution changes that were finalized during the first quarter.
• Operating income increased 32.5 percent in the first quarter to $55.9 million from $42.2 million in the prior year quarter. Operating income included $2.6 million of non-recurring charges associated with the integration of the acquired Viking distribution operations.

“At Viking, during the first quarter, we completed the initiative started in 2013 to establish our company owned distribution operations through acquisition and transition of fourteen independent distributors covering the U.S., Canada and Mexico," said Selim A. Bassoul, chairman and Chief Executive Officer. "We are in the process of integrating these operations and are positioned to fully control and enhance critical aspects of the sales, marketing and customer support processes. The initiatives to integrate these operations are anticipated to be largely completed by the end of the second quarter. Although we anticipate this strategy will benefit the financial results in future periods, the first quarter reflects a temporary adverse impact on sales and profitability at Viking due to disruptions caused by this transitional process during the quarter.”

“We are seeing a positive market reaction to the new Viking product introductions launched at the Kitchen Bath Industry Show early this year. We were pleased to have received the top three People’s Choice Awards recognizing three of Viking’s new products, a French door wall oven, a lineup of cooktops and the 7-series range. These top vote getters are all now in production. Additionally, we had displayed over 50 new products at the show and expect all will be available by second half of this year.”
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