Middleby : Baird Conference November 2020

Baird 2020 Global Industrial Conference

November 11, 2020

Middleby Overview

THREE INDUSTRY-LEADING FOODSERVICE PLATFORMS

• 100+ highly-respected, leading brands
• Global business infrastructure
• Highly synergistic business segments
• Technology and innovation leader
• Strong track record of profitability and cash flow
• Well positioned for existing and new market trends

www.middleby.com

SEGMENT REVENUES

Food

Processing

13.5%

Commercial

67.1%

Residential

19.4%

SALES BY GEOGRAPHIC REGION Asia 8.7%

United
States	Europe and
and Canada
Middle East
65.7%
21.9%
Latin
America	2
3.7%

Strong Track Record of Long-Term Growth and Profitability

Mustang has strategically invested in core categories through the acquisition of key brands and has subsequently driven significant margin growth

										Historical Sales and EBITDA
		($ in millions)
					2006-2019 CAGR											$2,959
														$2,723
				Sales	16.6%											$2,572
				EBITDA	16.7%								$2,268	$2,336
				Revenue								$1,637	$1,827
				Adj. EBITDA						$1,429
									$856	$1,038
								$719
						$652	$646								$569	$638
					$501							$514	$523	$515
$403								$402
						$368
				$187	$224	$305
					$124	$143	$146	$154
$86
				2006A	2007A	2008A	2009A	2010A	2011A	2012A	2013A	2014A	2015A	2016A	2017A	2018A	2019A	2020LTM
		Number of acquisitions:
	1	5	2	4	2	7	4	3	4	8	2	7	8	7	2
		Acquired revenue ($ in millions):
	$10	$220	$34	$138	$48	$149	$76	$243	$99	$514	$145	$279	$394	$177	$47
www.middleby.com													3

Cash Flow and Liquidity

Q3 2020 LEVERAGE RATIO (IN $000S)

Cash	$220.3
Debt*	$1,832.1
Net Debt**	$1,785.2
LTM EBITDA**	$563.4
Total Leverage	3.17x
Covenant Limit	5.50x

• Excludes approximately $120.5m classified as equity and attributable to conversion feature under US GAAP ** As defined in the credit agreement

10-YEAR FREE CASH FLOW GROWTH (in 000s)

										$431
								$333	$331
						$269	$264
				$221	$227
	$123	$121	$132
$92
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
										LTM

LIQUIDITY COMMENTARY

• Q3 generated all-time record high operation cash flow of $151.4 million, and benefited from $54.6 million reduction in inventory
• Record LTM operating cash flow of $463.9 million as of Q3 2020
• During Q3 Middleby completed a convertible notes sale and amended our bank credit agreement
• • Issued $747.5 million of five-year convertible notes, with a 1% interest coupon
  • Purchased a capped call for $104.7 million to effectively increase the conversion price from $128.62 to $207.93, which greatly reduces dilution risk (less than 2% dilution projected at $250 share price)
  • Notes proceeds of $400 million were used to pay down outstanding term loan borrowings and the bank credit facility has decreased by this amount
  • Total leverage (incurrence) covenant has expanded to 5.5x, allowing the company flexibility to continue operational and strategic investments
• Current borrowing capacity is approximately $1.3 billion

www.middleby.com

4

Near-Term Business Conditions-Recent Order Trends

Commercial Food Service

April	May	June	July	August	September	October
▼65%	▼55%	▼39%	▼17%	▼	▼	▼
				31%	18%	2%

Business in quick-serve, pizza, retail, c-store and healthcare continue to be resilient with increased demand for delivery, drive-through and carry-out. There was a noticeable jump in parts orders for the third quarter as well. Casual dining restaurants have become more versed in carry out and delivery as they face another round of indoor dining restrictions. In the marketplace there continues to be a heightened focus on safety and related solutions. Middleby is well positioned to support new and accelerating trends with Bluezone and other commercial kitchen innovations.

Residential Kitchen

April	May	June	July	August	September	October
▼53%	▼35%	▼9%	▲28%	▲59%	▲46%	▲45%

Order improvement has sustained as dealer and retail locations have re-opened and consumers plan for kitchen remodels, reallocating funds earmarked for vacations and other cancelled activities. Many continue working, staying and eating at home which has fueled a consistent demand for both indoor and outdoor residential cooking and refrigeration equipment. Resale inventory is low and sales are exceeding 2019 levels. Permits and new home starts in the U.S. are above prior year levels.

www.middleby.com

5

www.middleby.com

6

Transformative Strategic Growth Initiatives

• Established Commercial Beverage Platform
• Ice, coffee, nitro-brew, soda, liquor dispense, blending, smoothies, soft serve, and shakes

• Technology Innovation Supporting
  Sustained Brand Growth
• IoT Platform Development
• L2F Kitchen Automation
• Middleby Control Platform

• Established Premium Residential Platform
• Acquisition of Viking, U-Line, Lynx and AGA Group
• Added portfolio of 10+ premium leading brands
• Development of company-owned distribution network in USA
• Showroom introductions in Chicago, NYC, Los Angeles and Dallas
• Viking complete new product lineup

	Continued Expansion Into			Continued Expansion in Commercial			Innovative New Product Launches
	Key Geographic Growth Markets			Foodservice and Food Processing Categories
	 Brazil	 Russia							Middleby is enabling Kitchen Innovation
	 China	 United Kingdom			30+	Acquisitions of leading			through over 250+ new product introductions
	 India	 Australia			brands and technologies
	 Mid-East	 Nordics

www.middleby.com

7

Three Synergistic Platforms Working Together

• Sharing technology and engineering
• • Technology sharing across segments
  • Acceleration of development and to-market
  • Shared Controls and IoT
  • Integrated Controls platform
  • Internet of Things ("IoT")
  • Automation

•	Supply chain	TECHNOLOGY
•	Production capabilities and platform manufacturing

Together We Bring to the Market

• Deep and Unique Expertise in Foodservice
• Culinary capabilities
• Food Safety
• Kitchen Efficiency
• Connecting with retail, restaurants and homes

www.middleby.com

8

Middleby Revenue Composition - Commercial Foodservice

SEGMENT IMPACT

• Quick serve and fast casual fare better due to delivery, drive through and carry out support. Same store sales trend ahead of prior year in recent weeks
• Pizza performs well as delivery is their core and large chains aim to hire 60,000 additional employees
• Fast casual demand remains and restaurants have adjusted, requiring improved delivery and take-out services
• Retail and c-stores continue to see demand as their customers pursue alternative foodservice options that are not dine-in
• Healthcare and assisted living sectors continue to perform well
• Casual and fine-dining heavily impacted
• Travel and leisure market is challenged as air travel is significantly impaired. Hotel occupancy is down ~50%

INDEPENDENT

11%

CASUAL DINING

5%

INSTITUTIONAL

7%

HEALTHCARE

4%

C-STORE

7%

TRAVEL & LEISURE

6%PARTS

17%

QSR 20%

MENU

DRIVEN

8%

RETAIL	PIZZA	FAST CASUAL
8%
8%	7%

REPLACEME

NT &

UPGRADE

49%

PARTS

17%

NEW BUILD

26%

www.middleby.com

9

COVID-19 Restaurant Impacts

Domestic restaurant same store sales have been positive for several months according to reports from MillerPulse.

Multiple industry sources show sustained positive levels and stability, with some customers surpassing 2019 levels.

Restaurants are rapidly adapting to the new the new normal:

• Expanding to-go options, with curbside pick-up and third-party delivery
• Adding or improving mobile and online customer ordering capabilities
• Restaurants in all states offer delivery and carry out, while some are facing another round of dine in restrictions
• Customers are ordering parts and moving forward with planned maintenance schedules

MILLERPULSE WEEKLY INDUSTRY SAME STORE SALES, 2020

	10.0
	0.0
Performance%	(10.0)
(20.0)

(30.0)

(40.0)

(50.0)

1	2	3	4	5	6	7	8	9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43
								Week

Source: MillerPulse Week 43 ended 10/26/2020

www.middleby.com

10

Customers Returning to Restaurants

AVERAGE CONSUMER WEEKLY RESTAUANT VISITS		RESTAURANT RESERVATION YOY CHANGE 7-DAY MOVING AVG.

Source: Technomic Economic Navigator	Source: OpenTable; Technomic Analysis

• Data confirms customers are back to weekly restaurant visit levels of pre-Covid (3+ weekly visits)
• According to Open Table, the restaurant reservation rate continues to rise
• Studies show consumers want to return to their favorite restaurants

www.middleby.com

11

Innovation Supporting Industry Tends

ACCELERATING TRENDS

• Added focus on off-premise (delivery, carry out and drive-through)
• Emphasis on menu simplification, throughput and space utilization
• Labor availability, training and cost
• New foodservice models - modular, ghost and cloud kitchens
• Remote operation, monitoring and service
• Kitchen automation

MIDDLEBY SOLUTIONS

• Middleby ventless kitchens for non-traditional and space savings
• Development and launch of Open Kitchen
• Middleby modular and ghost kitchens
• Data intelligence and automation solutions
• Middleby advanced controls
• Middleby touchless and automated Pick-Up Cabinets (PUC)
• Launch of Bluezone Viral Kill and Food Preservation air

purification units

www.middleby.com

M I D D L E B Y V E N T L E S S	C L O U D - C O N N E C T E D	I O T C O N N E C T E D
S O L U T I O N S	M O D U L A R A U T O M A T E D	K I T C H E N
	P I C K - U P & D E L I V E R Y
	S Y S T E M S

M I D D L E B Y M O D U L A R	V I R A L K I L L A N D F O O D	M I D D L E B Y ' S N E W H I G H -
A N D G H O S T K I T C H E N S	P R E S E R V A T I O N U N I T S	L E V E L U S E R I N T E R F A C E

Over the past year Middleby has made significant dedicated investments in R&D to focus on technology
initiatives, solutions for industry trends and invested in targeted growth segments. .	12

Beverage Platform Innovation

CAPITALIZING ON MARKET TRENDS

• Automated Coffee & Espresso
• Nitro Brew/Cold Brew
• Soda & Tea Dispense
• Blending & Smoothies
• Shakes & Deserts
• Ice & Water Dispense
• Liquor & Bar
• Beer Brewing

www.middleby.com

13

"Open Kitchen" IoT Launched 2020

OPEN KITCHEN PLATFORM CAPABILITIES

• Energy Savings
• Equipment Connectivity
• Automation
• Food Safety
• Workflow instructions
• Employee and Customer Safety

www.middleby.com

14

Complete Kitchen Ventless Solutions

BROADEST PLATFORM IN THE INDUSTRY

Middleby is able to offer customers a complete ventless solution, a commercial kitchen without the need for traditional overhead venting

• Ventless kitchens support many fast-growing trends

•	Ghost kitchens
•	Smaller footprint
•	Green and energy saving
•	Foodservice in non-traditional spaces including food trucks, mobile	space, industrial
	warehouses and older buildings or historic locations

• Reduced Operating Costs
• We supply many products including ovens, fryers, conveyor cooking, griddle

www.middleby.com

15

Delivery Automation with "PUC"

CONTACTLESS, SECURE PICK UP SYSTEM

PUC SMART PICKUP CABINET

• Anti-MicrobialUnit Resists Viruses And Bacteria
• Skip Wait Line With Dedicated PUC Self-Serve Kiosk
• Secure touchless pick up
• Innovative Analytics Reporting Capabilities
• Decrease Operation Labor Cost
• Interface With Existing POS System
• Increase Points Of Service
• Modular Expandable System
• Temperature Controlled Environment
• Elevated Customer Experience

www.middleby.com

16

Patented, No-Filter Air Purification System

• In demand by existing foodservice customers
• In study proven to destroy 99.9995% of airborne contaminants
• Most innovative, advanced technology available on the market
• Addresses top consumer indoor dining concern
• Core technology recommended by CDC, used by U.S. military
• Modular system, easily scaled for spaces or built into furniture
• Food preservation system currently used in Viking refrigeration
• Visit www.bluezone.comfor study and more information

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Strategic Sales Initiatives

OBJECTIVES

• Increase engagement with end-users
• Promote differentiated Middleby solutions
• Drive product specification
• Leverage digital to increase awareness and demand
• Increase repeat and after-sale business
• Leverage sales channel partnerships
• GROWTH IN PROFITABILITY AND MARKETSHARE

D I G I T A L M A R K E T I N G A N D M I D D L E B Y L E A R N

B U Y O N L I N E E -	I N N O V A T I O N C E N T E R
C O M M E R C E

MIDDLEBY INVESTMENTS AND INITIATIVES

• Middleby focused exclusive reps
• Middleby Learn and Digital Marketing Initiatives
• Segment focused sales teams
• Chef Network
• Consultant Team
• Digital Sales Support Tools (SETVI, BASECAMP)
• Middleby Innovation and Training Center
• MAINTAIN BRAND FOCUS, ACCOUNTABILITY AND SUPPORT

M I D D L E B Y

C O N S U L T A N C Y

S E G M E N T S A L E S	M I D D L E B Y ' S D I G I T A L S A L E S
T E A M S	S U P P O R T T O O L S

www.middleby.com

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Middleby Sales Representatives

CONSOLIDATED REPRESENTATIVE ORGANIZATIONS

• Sales Reps Partners focused on Middleby solutions
• Reps investments in test kitchens, culinary support, digital marketing & beverage specialists
• Sales efficiency through Middleby Enhanced Support Tools
• Commissions focused on premium products & technologies

www.middleby.com

19

Middleby Innovation Kitchens - Dallas

"Chef driven innovation and demonstrations"

• 40,000-square-foottraining and demonstration facility
• • Middleby commercial innovations, 136 pieces
  • Demonstration/training stations - vignettes
  • • 15 live cooking vignettes
    • Full beverage demonstration
    • Ad hoc kitchen
    • Brewery
    • Large IoT demonstration area
  • Elegant dining room for 70 with full bar
  • Training room for up to 64 guests
  • One-of-a-kindexecutive-dining experience
  • Experienced staff
  • • Certified Master Chef, Russell Scott
    • Sous Chef and video expert
  • Ability to have live video streaming from three locations within the facility, simultaneously
  • Open Kitchen Connected

www.middleby.com

Driving Specifications for Solutions

MIDDLEBY DIGITAL MARKETING

• Middleby Learn
• Middleby Main Dish
• Podcasts & training videos
• SEO and Target Marketing
• Online tools for consumers and reps
• Active social media engagement
• Video content

CONSULTANT SERVICES

• Design files (Specs, CAD, Revit)
• Creditable Education Classes
• New Technology Trainings

www.middleby.com

Residential Segment - Revenue Composition

RECENT CONSUMER SPENDING TRENDS

• Growing trend of cooking and dining at home fueling indoor and outdoor kitchen upgrades during COVID
• Heightened interest and demand for new appliances due to meals prepared at home and consumers using time for online product review
• Order-in,pick-up and delivery for food resulting in more warming at home. Trends evolving around meals with food items prepared both inside and outside the home brought together

Residential Sales

Other & Non-Core 10%

Outdoor 12%

Refrigeration 30%

• Committing to home projects and remodels due to continued work-at-home and school-at-home
• Increasing demand for new refrigeration to fill needs for larger capacity units
• Rising demand for appliance service due to greater residential equipment utilization

Cooking & Ventilation

48%

www.middleby.com

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Residential Kitchen Appliance Shipments

SALES CONTINUE TO IMPROVE

Residential sales are sequentially improving week over week since the April lows and reporting growth through remainder of year

- Cooking up 1.5% YTD and 14% Sept
-	Refrigeration -2% YTD and -5% Sept
-	Dishwashers -2% YTD and -3% Sept

Units in Thousands

3,000.0

2,500.0

2,000.0

1,500.0

1,000.0

Residential Cooking Shipments

2017

2018

2019 2020

500.0

0.0

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: Association of Home Appliance Manufacturers

www.middleby.com

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Residential Home Sales

www.middleby.com

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Residential New Construction

NEW HOME STARTS AND PERMITS IN DEMAND

Domestic home sales and new home starts have steadily improved in recent months since the onset of COVID.

• Existing-homesales grew for the fourth consecutive month in September, up 9.4% from August and nearly 21% from the same month in 2019 according to the National Association of Realtors®
• Building permits remain consistent with previous month levels and 2019 rates
• New home starts rose slightly over Aug 20 and Sept 19, holding steady

www.middleby.com

New Home Construction

Source: United States Census Bureau

New permits approved

New home starts

25

Brava Home

Overview

• Patented cooking by light technology
• High speed and no preheat
• Multi-zoneand multi-food
• Cloud-basedsmart control with menu
• Time saver and eco-friendly

Opportunities

• Leverage sales resources
• Integrate light cooking technology in Viking and TurboChef
• Leverage smart/cloud control in residential
• Enhance digital marketing initiatives
• Attract generation of digital users

www.middleby.com