The Middleby Corporation (MIDD) 3 Aug 232023 Q2 Earnings call transcript

Thank you for joining the Middleby Second Quarter 2023 Conference Call. With us today from management are CEO, Tim FitzGerald; CFO, Bryan Mittelman; Chief Operating and Technology Officer, James Pool; and Chief Commercial Officer, Steve Spittle.

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. sir. ahead, go Please

thank quarter for earnings and on us our second call. you morning, joining all today Good

As we our begin, accompany the please note, there on investor are the page of website. call slides to

our challenging posted of business, We are quarter partners. strong impacted while channel continue processing it at performance to results, inventory food the a our and And record is with commercial solid market both businesses. pleased destocking second reporting progress at conditions have and to we our by residential

We our targets. quarter progress posted during continue and the overall improved longer profitability to make towards margin towards

Our focus to innovation benefiting profitability drive is from on new mix. our improved sales product

ongoing efficiency greater investments reflecting focused supply next are over product are impact from sourcing with the longer-term gains initiatives, providing design and realizing improvements year. and for we our manufacturing on We opportunities the chain

be While largely to of first impacted particularly quarter. continue challenging, have in market the all for has And with customers three businesses. the businesses, strong half believe across proven our residential have our segment, which of the our the we end inventory normalized and by foodservice we conditions destocking, to third the engagement residential be commercial will

years product customer launched accelerated the new sustainability. as speed, and trends of over Our energy, market we labor, game-changing past have growing challenges several target addressing introductions and innovations, food waste

future a industry. beverage the in our to IoT ventless as the of solutions. cooking controls, automation offerings and addressable establish and ice we've electrified positioning our and Commercial Foodservice and expanded the ourselves in segment, In Developed new market. capture leader exciting solutions, Middleby large And

to outdoor growing initial designs, pipeline significantly energy-efficient products demand broadened of connected more our innovation come. with and premium with brands industry-leading the have a of with and Residential, for electrified equipment addressing launches portfolio of we indoor

markets into full markets integrated we the successfully and Processing, food. protein expanding and on leading meats, cured automated bakery protein executed as a while line bacon, solutions such and Food alternative provider becoming new strategy pet have our of of for At

awareness Through for opportunities. we a and have our for growing strategic our our latest the The greater innovations a businesses. customer of substantial portfolio be in made to product brands centers creating innovation have our go-to-market proven asset investments, with investments we're pipeline

at traffic continues now X have increase. our commercial, processing food The innovation to showrooms total residential and a We centers. of

We and our culinary teams have our a partners engaged customer invested are daily in training heavily demonstrations. channel with hands-on with world-class

deepened these important wins. relationships We have from sales developed customer with partners are strategic new investments. realizing of value the the and benefits our Demonstrating

most featuring residential opened have excited portfolio. and and in outdoor indoor brand flagship to our show designs Middleby Chicago, innovations recently our We're the across latest entire

translating opening, we the Residential calendar Middleby foodservice long-term the are of June these our a Since investments to confident into quickly of that customers brands. today We're chapters trajectory discovering offer. early and impact has our growth booked all with have all for

An area commercial In kitchen. capabilities, Blue we in-house in we'll of controls lead a clear and acquisitions the with competitive we're extending with expands Automation. Middleby and confident and our in implemented Spark as IoT. Spark are the our controls automated development quarter, also Blue several digital software manufacturing Filtration digital the solutions completed advantage provide additions

adding with cost savings a While our operating improved automated with filtration providing developing our full-line filtration quality solution. furthers of frying automation now best-in-class technology, customers expanded strategy solutions, oil our and patented food

maintenance TERRY quality, equipment in biodegradable and completed performance, July, of early we provides ice with reduced food chemical-free solution acquisition the In Water for and the consistency TERRY filter also along water beverage. Solutions, improved

along a with aftersales beverage and with opportunity better equipment attractive experience The provides market. combination of of food, the customer sizable in and TERRY Water portfolio growth our significant for a Solution ice

our complementing of week, Trade-Wind, our with and residential announced portfolio of solutions. cooking an ventilation we expanded outdoor last acquisition designs of recent most offering custom manufacturer and unique just indoor And ventilation a brands of

and build in to our go-to-market service further businesses. strategic investments three innovation, critical and capabilities each upon industry-leading acquisitions in our Our food strengthen of continue the competitive marketplace positioning

over on our some to more innovations call also demand of that product the James new trends deck. for These in growing recent Now slide James? highlighted I'll electrification our the pass kitchen. automation spotlight the and the launches most are address in product investor

residential product space. Thank focusing you, exciting in electrification in products developments discuss for launched and Rangemaster, homes. have of some full will Novy launching or sustainability and recently AGA, lineup, induction Viking La our Tim. Today Cornue, a suite on the

with customers today. our commercial rely our residential sustainability. customers that precision, These performance offerings the and same on benefits provide speed, Safety,

of CookTek, residential few use, commercial In such Wok. for unique brands one the introducing Drop the a products Additionally, as our Induction is

Middleby tops French allows called to users strong classic also to cook the ranges which the proud induction, their most Hub, is an with And extensive lineup to product designs Invisible is directly Novy countertops. innovative and of undercounter bring introducing on market the to ranging from range commercial. American

As find products a near explanation these our of how the perfect that induction a efficiency that the also electric deck along I've compares cooktops, slide before, on induction included with in yields, highlighting you benefits works. versus brief can new induction investor and gas

Automation the a the generate customers. years, chance NAFEM interest the product adoption choice market for Especially introduction Taylor at Grill the the who've restaurants those strong high-volume successful shows. and the NextGen been among for pod Kitchens continues grill's had gain capabilities our and at Now NRA the couple first-hand come to Grill. general experience Innovations let's few to our to revisit the has of the Middleby space, service quick continues NextGen in a commercial that Why past of griddle highly traction of

brings cooking cooking control, precision. through active for compression allowing method both its simultaneously. innovative continuously next-generation Grill for automation sides With embedded offers this NextGen cooking, The this gap innovation, variable

cooking inch. or front This precision and an an cook reducing side accuracy Grill and customers consistent of level and NextGen enables platinum back to dramatically parallelism of gap its to within an control X,XXXs to inch with side consistency of our The up XX,XXXs can improving compression to achieve times platen a of XX%.

cooking, reducing and enhancing by minimizing customer improves of satisfaction. thereby significantly automation our ultimately under offerings consumer or instances over quality profitability waste, food and safer this food ensuring Furthermore,

conclude, and expect will In and I new and next refrigeration, of as to cook rapid like from a on in of XXXX consisting new products up. built-in QX focus a QX we oven give quarter, a you Pitco dishwashing exciting accessories. Viking for the and in frying coming innovation introductions cooking platform glimpse such from from I'd what's the Before slated groundbreaking residential launch TurboChef,

it I'll now and Bryan. you, Thank pass over to

these excited And facilities. results get before quarter results, from our the reporting and a past to record longer. record to I'm like Thank look you, James. lot Blodgett back I'd I to discussing be some

celebrated quarter, favorites. they its I estimate have not attempted and are making pizzas many XXXth cookies year I This their past to this ovens, right oldest responsible in ovens Vermont. of come here is certainly of During out Blodgett for how And my have company. domestic know our but

began Also, of century, beginning began when executing here. the strategy our at M&A Tim this process the

we are As helping lead the way. to logic innovations look forward,

the of helping entire Blodgett we to Middleby new I heights. as for build foundation the for charge the thank want and reach leading family So

adjusted was a They million generated. And $X was challenging our QX EBITDA with well record conditions, of of having continued billion. spite revenues EBITDA XX%, in quarter, exceeded heights, nearly organic market new of $XXX our been margin Speaking highest ever. adjusted

we $XXX are of XX-month last On a at adjusted basis, million EBITDA.

While revenue we headwinds, slightly was given prior our X% EBITDA grow the to total able down adjusted were organic year. dollars residential our the still over

and I margin basis expanded margins and XXX company basis, values exchange foreign organic an on the any points total acquisitions will excluding all impacts. hereafter are Our discuss meaning

share in EBITDA our excludes and The prior Commercial release GAAP up the over X% XXX basis as back organically in of year. XX%, the $X.XX. amortization press over per was earnings income EPS $X.XX. ahead reconciliation Adjusted well were revenues the prior which was as non-operating the noted items margin points of Foodservice adjusted other year. were expense nearly pension

We margins businesses, investments, as our as focus product we improvements how inflationary improved and benefits mix costs pressures. to constant an well response operational as as are we our to pricing very pleased evolve from have in see acquired from integrate driving continued our from capital on with

margin XXXX. Total EBITDA revenues Food revenue million perform well. record an we XX% to In residential, XX%. very adjusted Processing increase saw $XXX continues of nearly versus decline an were organic nearly was organically. of The XX% nearly

for up basis Our quarter, year, adjusted XXX just XX% almost at the XX% over the prior was and for the about margin EBITDA points we are year.

for operating for flow year-over-year the was $XX strong a $XX first quarter Our million the $XXX of half year, and million generation increase. million a rather the cash

$XX invested expenditures During approximately in on million the million and acquisitions. $XX quarter, capital we

to in flows for continued Seasonally, are our the looking flows us. cash we as higher months, having we half in look cash Thus, year, the capital This forward of the past exceeding should half back realize at flows were working second cash rates further But flows stronger even cash result full operating in for improvements. approaching $XXX net strength cash million. income. XX the year, driving conversion then

to closed leverage down ratio As total X.X moved times. we our QX,

$X.X is limit we of X.X covenant currently Our borrowing time, so billion over have capacity.

of the anticipate are me importantly, next time look half, to over the spend very how half While work pleased more 'XX performed tirelessly let Even increase with we the shareholder But as can outlook. better and very little notable first we half. years first headwinds. near-term few second given be the we that than especially We we bullish on the remain in out value. a

Challenging extend with off is remains inflation, last first and peak behavior year. the seen these the or rates where the consumer in us, values beyond market market headwinds. interest half marketplace US. resulting in for or well Demand the Starting persist, The meaningful conditions and the UK residential. levels a obviously the of peak

resi. for QX should the be hopefully trough

than we margins, business should sequentially, positive year, least but an growth. quarter QX, QX from can seasonality of see at at think impacts hit we As Nonetheless, should and deliver should remain sales the points down in double-digits. the and year-over-year recent third QX. momentum out coming we finish will modestly stronger believe they absorption do consider order inflection fourth be the we We the To looking the challenge trends,

posted processing, we higher strong this anticipated a ago. had very discussed quarter were food and three we when segment than second For obviously months revenues we

backlog strong. Our remains

many buns and cured breads. meats in markets strength including seeing serve, are we and We

but the we However, headwinds, improve some this the in especially areas expect may are where in costs high, poultry short-term. underlying are bacon, food and facing

we on will QX at schedules, around likely be QX As product as impact from levels. these and operations QX down seasonal well as look factors, mix, performance delivery

prior QX and Nonetheless, XXXX deliver the than the will than stronger half. expansion. second first better margin revenue QX so and be year, half be should both year-over-year growth QX will

QX expect we expectations profitability also after from thinking the be our and consistent to that be revenue Also, is inventory quarter when last the QX. commercial, ago. Accordingly, our we it about I believe outlook performance, exceeded QX on destocking during us expect For to behind near-term note we call to important based fairly QX. mentioned quarter that with a

QX. potential in QX QX revenue This resi. then, better in than be of Putting be and even the results earnings Then total when too, to the looking company FPG in stronger second the QX the at anticipated the should half than three together will due lower lumpiness out segments year. performance, and a bottoming

an Before for in segments fourth company all total. stronger anticipated and quarter the

be fiscal reiterate a QX residential the despite growth we expect to markets. result for company company 'XX, and that in stronger in would total over QX. I This basis, than on challenges both total 'XX QX

needs. we across our customer I entire are innovations As delivered and I uniquely addressing look see being organization,

Our our profitability modernize and to and develop go-to-market service and expand reach unmatched stronger flows our to processes, add drive sales to improve innovate, grow ability continue capabilities, our and cash new manufacturing enhance globally. to and to to our systems to

success. excited from California hungry We the a delivering to for to teams about prospects to greater fully results. thirsty all UK come work remain China, are and every for our Vermont From strong long committed time to to our continue come. day We

will confidence We that the to continue have all the reach world in we heights. new

Thank we'll now and questions. take your you

question question-and-answer begin session. Jefferies. first Boroditsky The now Instructions] is Saree ahead. of go the will Please from [Operator We

year. in you could tailwind about it thinking destocking if think And quarter Thanks. how demand the you're this on I next for year a impact of wanted segments. the that then really and full into environment, I a be flat Good both destocking quantify morning. argue see for to should we the could

So us if helpful would Thanks. size I it very be you people. for that, think help could

Saree, it's Bryan.

that. size Middleby to the not way, you to Given going offer I'm numbers specific

be commented the customers think QX similar right? you to overall I that consider, and know, in I QX when quarter. put with it's important with happening expect to as does we we and based their really tailwind third what's improve. noted, is the get strong. present starting out market given the So happening I'm market to But results the commercial when the sorry, on we we as here, in and a levels. QX. we've it do QX, customer QX And dealers trends there, needs, what's And And does then about think the past our beyond

you and QX managing retailers the residential certainly of they're dealers, residential in As where pick sheets categories are do segment. is us. our for for a a being think up seasonally their But balance well in somewhat these markets, often product think we cautious QX the quarter challenging well. of variety the variety as that's about obviously, in our products customers, as the weaker start within things a to days

from sellout you through different in way. a perspective what residential? seeing a in and you're question phrasing Maybe Could a foodservice commercial go

Yes.

I way you you're will to will that of year, think terms commercial. significant don't neutral. go become as then then it in the a kind like. be sell-through. as channel would think kind bit away. in reload they a more it Certainly, to, into we're is think commercial going tailwind those we in we on across the with have of going time and of there's cautious We how the will I segments. half. we impact two Saree, I a And year strong partners you're move become it's So residential of When partners of a lot to that have back so would say brands be more engaged will next that particularly quantifying think hard channel stock little -- the more then a there's in the that be I next alluding it pretty the And than have will our headwind partners more -- --

ever that's So then what One is fit and and we're of general closer mean to I is there. think kind kind understanding think than I there's confidence aspects the And business the plans. as through then chain. things their X market, of that selling them I we of one gives us there's really and into the how certainly,

of of end the So third that comments market, kind we levels understand the general I in and of with the end of we're as inventory where think I the mean, partners, channel we kind quarter. kind said our the are at nearing of

lot change, With strong. where of and I mean you out I there's store public information can there a the think openings see pretty plans are

they little there's as that a bit sure wanted that make they those So equipment the of on the could execute to plans. in had they ensure inventory channel to

commercial pull grill Residential, we there. is So I you feel certainly certainly, end markets mean, biggest where and The about apart. I good of in kind the we're situated it pretty outdoor the as think on impact brand.

turned actually a be the So last in position -- to believe year. of think really we'll hit the do impact be the lot we grows dynamics We as we we because will category there the started a quarter exit and we the and the positive year there. see fourth of in end some growth as better of at we that much outdoor

a a of pretty XXXX. a there's feel know in like around quantifying little bit for we So kind good year that. and the sets color of place, finished it it good certainly, specifically, pretty backdrop it's I not

the Appreciate I'll leave Thanks. it color. there.

Dobre go ahead. from is Mig Please question next The of Baird.

that Yes. brought stick this going up, with destocking. Good I'm morning. to topic sorry,

much not and general it both. the sounded of kind Just customers. is market is inventories QSR to But where you with visibility terms destocking these is as problem I'm are happening of whether it's clear have your how be can here, Or QX, in and you end firm This distributors happening in to in the really of like with the the not by be of such? assessment solved. or yes, occurring this clear with some that,

the inventory the Like right? heavily don't we channel. but in perfect channel, have with the engaged visibility, don't have We we're that's

with of we of sharing think the and certain areas. a I larger get lot -- numbers, So indications in particularly

have I visibility. yes, some So think in issue pretty the has good And been I do both. we mean

it in think I that hands lot the channel their general much of our they business, not went to a be kind I as our people want could, would right? of the So on their product. you Now to market, tends -- through supply mean, they get anything I it's think chain, like inventory. normalize

bought move and they maybe drop those that under some have level situations to So destocking perhaps as through orders then and kind the don't us ordinary normalized with us. wouldn't that they'll work to stock of get products kind back they of with inventory -- of start some other

So the seen kind marketplace. that in of is what we've

and see in versus So carrying mean, large, I I what they given the I think a plans the I of maturity in But the of think we high channel. yes, by their end change, a through do had with this level confidence more that past. little is, have But the think that the in they're end quarter. the think all is I the by third bit we growth move by mean, and we largely pretty certainly of where year. of

what we -- becomes certainly I versus what go more a and nominal got in it to here we headwind mean, we So been it's then see. think QX will and quarter one

I think will have of at the beginning still QX.

destocking a your this the talking revenues about has to resulted here, a to quarter? headwind in realized orders? a shipments your Or your When in is this and headwind headwind you're to bookings

in brands the still both. didn't think to I so lead lot got we mean, I But -- I I world again, Yes, normalization. think, because touch of resettling times. would on a say we've is

back little They're out reasonable bit much few categories. of of very to lead you in our still normal across look a or a portfolio, we're If kind times.

-- say, let's to a starting So sales on the kind normalized equal, are of portfolio, for but of basis. orders XX%

And get at if million trying that food you've I'm the the 'XX, looking that's what Right. because last I at pre-COVID that end than of was $XXX mean given kind was times I $XXX of backlog service less us it, for data normalized. million. backlog when call at to was, reported lead were commercial

does to then these own burn your normalize to sort going of as because 'XX backlog about XXXX? think for have curious have as I'm production XXXX, this related to dynamic And this production is where into So you to exiting headwind be this, normalized. backlog times towards you lead become a how

what Yes. mean, new bringing think think to be, impact backlog absorption. well, what's I we This going is you elevated absorption an that times. pre-COVID be is. would level make say call Bryan. I the backlog -- times. of continues I when you're a after expect getting as was be normal than it we our will I And think normal a don't have obviously, level to negative it, from down the our impact higher don't to those meaningful pre-COVID to comparisons I'll to on kind Certainly, the

business an a completely some So that's a yet, areas. normal half yet given it backlog in are where their the is. with quarter backlog used of date given backlog. need be be in for, we'll quarter given chain changed say ahead XX sure normal I how again, Given to it play don't a ordering to to and know of closer the that in of-quarter the growth our more little we're the leads to expect over And still challenges, ready relationships coming years through the narrow next not new here terms supply I'll customers, things we've times, just exactly our I'd a the that our potentially of in say but a XX we still inflation closer I'm have next levels, larger to expansion current are than that see but will patterns few to given on is over used how of to think think indication a I bit out they months. commercial we're be, again, focused going to are delivery right?

final exited this, take lot but what come sounds your me of is is end your moment XXXX, for the investors. and it intake a by on ago, I I order One means it that what clearly, going apologize to a relative backlog for to insisting that 'XX. mentioned this exceeded question, question like down XXXX. to shipments If I from you Implicitly, get just where have

up is if fair you And So Or else that to and assume into won't changes. for adjust I'll production. an will have nothing you. back it us XXXX, in you production Thank demand to XXXX have catches on again, impact finish there. just

Yes.

it's think I the normalization. of effect

backlog as you going got are had as our was would of order ahead, rates we through XXXX. than I our XXXX There I'll been, you several have a mean, shipments right? production our lot went has So to that of lower this years, So we some have last exit significantly a periods I where by and orders pulled the outpaced rates. think normalized say,

half kind I shipments of The demand. in normalize. the the through back inventory fundamentally match patterns So normalize. patterns will order And the as of year, and see will you channel will of backlog will normalize. kind will think that The this we order go

the with we the cetera. where that chains, I et are customer happening marketplace where dealer at and in we look I the of we're So what products, that's see strength mean, at business some wins, with new channel, what's us opportunities certainly, the new and the we of think with developing

think I their I with and are plans. So store mean, obviously, I the opening we're chains -- mentioned, where that's as healthy

the last So situation of XXXX. chain going of believe moving all lived that's see healthier through kind a in I we much years. pieces we there these several the And that think we've and are disruption kind being that world that all into of in supply yes, normalized

we is us. the think think not that in necessarily would relative down backlog pre-COVID healthy a period. is to for I where backlog a I have So headwind coming And still backlog been

color. the Thank Appreciate you.

Please KeyBanc. Jeff ahead. of question Hammond go Next from is

Hey, guys. Good morning.

morning Good

what I trying rollouts, business on seeing just momentum. you're get smaller that? guess, And in to noise? business side of the lending just update underlying on through kind of about going standards, Just maybe been growth. cutting us seeing a new store sense you're destock think better have tightening The on concerns and the blowing I'm I to, QSRs around independent And then talk real again, what momentum. want over

morning, Jeff, Good it's Steve.

I'll maybe we're the a of you seeing So give just demand underlying areas couple of market. what

which So you large before. QSRs, touched upon hit the we've

As transparent obviously, Tim said into been them. the next they've And back their very of first the again, around to year. close been earlier, even we've half very year new pipeline, and store opening this half of

into this than ever back in the last years, have coming success et huge more So of year. as and which part plans think has through they've couple some that it's certainly lead Dallas, been into cetera. it's a big dealer And rollouts focus talked of the really change been, A which last events those of to seeing see I just we of also will demand get Tim area an solve all especially. about the of of general us. more the strong whether side a talked so and really new think to I a whether that is year has do service to recommitted and to next we which the over driving the think, half challenges still I labor, I Also about innovation business, for think the of we've kitchen year, so continue trainings for that the that for been us. point has trying be adoption dealer technologies, be dealer

which comment, continue lot guess smaller for the lead I into issues really would get to closer equipment which us demand. seen restaurants, that independent causing asked the say, well again, do think does large, a the about have which, lending in allow to market, not by dealer So would Jeff, standpoint, from to dealer side of we last of us, issues and fall the probably a and more business. I does I you

it's And of one into business side, I run We upon I think consultant term, dealer So months is last then specifically to short the we about say schools, the our that have the but to that. thing XX give just XX some not around talked pretty change. very I of about we visibility would important I especially always whether note. before, can think that I've a both think the several really think segment, especially next talked us is the We those good but maybe well, as business, XXXX. projects in institutions. And touched months of a it's indicator into for specific track areas, actually that last good I demand, demand an

Okay. Real helpful, Steve.

kind something their on girls side victory of it resi, the bit bouncing. the the stock destocking and on is you just clearing deeper? it Just know out maybe that's I'm wondering order little the seems rates? is trigger on Or was taking to longer. is like a I snapback destock or bottoming in being the process if think I UK, mentioned

what's maybe different versus Just frame expectations? maybe previous

Yes.

the market interest I continue residential I rates think I tougher has this market been mean year, bit been has a Housing challenging. think right? rise. to

But think have I interest again, think some a front went through rates been there not So more market. kind robust expecting as bit think little generally, of half headwinds the the the challenging were in I you year. a about the we of, pace of that particular of as you

big been even more the market. is residential that the a challenged of has US UK, bit little our think than I in business a probably which piece So in

more of we've some than which aspect along again, bit destocking, to the of through some which our businesses, seen tend of that as things half, hits other we've little those So to front are I business is, think a I the the with more gone have a mean, it. make-to-order the grill

said, out. we've think do I think what bottom we start So that things to seen being

on lot say, core place, slow I of a case with and -- late, there's in and any the uncertainty residential. of been order in cooking things We've I'll seen think our as kind that's categories. time particularly improving of disruption, some trends

market lot the certainly electric the I And electric well. those an some see some and we've also, I of mean, of a -- from overall. as residential got say, type even are portfolio with are into the would commercial our -- there investment with areas bringing along as exciting products and growth. there of So you can -- technology of

I think I we're little at inventories improvement. bit beginning been challenging, it's healthier of more and trough a the inflection, of hitting little but bit also outdoor So think the a

So coming kind I bit we well. do challenge. think as what's -- I is I of in -- I is QX feel like going see little mean, But certainly QX mean we're the a

the we're turn feel So like there. I approaching

Okay. Thanks, guys.

The Tami JPMorgan. Please Zakaria next question is go of from ahead.

Good and you're well. Tim hope Hi. doing morning, I Brian.

So segment for my unexpected I it quarters? Processing How margins for margin, is we there? processing first think on the higher the lower anything next sequentially food the think revenues for Food should two was about question happened

Bryan. Yes, this is

the than year of trending delivered. The get that projects quarter, the fourth in we by do be of second the year. just we into impacted And we the half margins just will quarter better the did I of the think second the mix are half least in as some then nature the of first and line. at

third always QX, And the the So is makes that half proxy I year stronger sense. more the first quarter. then think if you of than as for QX look at a

where food segment very I'm does but it. today? not Got it, missed food I helpful. backlog commercial stand the processing And That's sure your then for and

were Yes. regularly a disclosing. number specific That where isn't we

so you Thank enough. Fair much. Okay.

You bet.

ahead. go from Larry Blair. is next Please from question The Maria William De

don't to morning, absolute Thanks. are can to the an I everybody. in calling you on specifically? but there's number, I to weakness backlog Obviously, up want year-over-year Others give wanted Good talk you know processing. order some out. sequential processing maybe market. follow

of it. mentioned You some

think called coverage you think you So do think, have levels And of what temporary. and that weakness order curious you next quarters? is over out since I the you, that about few kind the the

So I to that to better just some wanted confidence get XXXX that's not? into or going look

right? get digits Yes. But that have it are rest live for come that that the three say, then to still the delivered projects in for mixed, within, that business We the The I'll year within products coverage XX like other peak, the XX that percentage a areas is months good have say very on one backlog I into backlog basis, strong, I'll remains So in in and we some a year. next is we of that of have feel right? many in months. single orders for

of moderated. very maybe beginning here, isn't year, with to orders of the it to interest So comments what were robust like periods year things I'll rate bad. environment and say, want have the good gone from with careful my certainly, we've last and be into I this If

of the QX challenging as food as say look general to talked gone others. there in at fundamentally I very the And still weaker put the besides health be are again, from the stronger. will little margins guess, caused it's it all We think business cost than of as levels. don't think some strongest rates, at a call kind But QX be that But customer for again, But again, we've backlog noted bit what that of I and changed couple strong of to me great won't interest some of we cause are high, I'll about to good. I areas, -- anything underlying together, a means the business. underlying a and I very the has pockets there still what QX. very that be for lumpiness to the

more Or M&A business. there billion smaller second potential processing in actionable potentially some that larger larger you're Thank, it Bryan. you've on grown to and there out have is would there? processing to done But guess nicely. be that continue I of know a pursue then question likely M&A trying to these I get is ones up $X And are for there? maybe to deals a

Yes.

I to we certainly, really year -- plus That's M&A. we're on XX comment on been a history. going not mean Larry, work say, So

So I platform, both that mean I say significant think through opportunities I and would acquisition just see organically. grow the continue to to we

feel I long like still there's a So there. runway

I in If just enough. Fair could X sneak more Okay. here.

underproducing on I'll how commercial, year. are big getting versus retail? Just backlog more that there And the But to mostly, I'm understand dealing we the guess, versus trying leave we're versus Thanks. with actually planning concerns to are just destocking it is you're second -- in the underproducing so quarter. retail you in third specifically, clarify. so, I In half, destocking seeing if around the next

by inventory? Can you you mean I clarify what dealer mean by mean do you retail?

end No. don't, and selling the are we the And we user. mean potentially you further, inventory their underproduce potentially going pushing the then Or retail? then dealers I the out retail, dealer into sell-through if versus to into the issue inventory the right?

Yes.

about So it to well here we you I say to are. I if I think would whether in selling the that QX the in answer as both is of that's sell-through, what want the kind supply that, yes, the underproducing to less as or dealers sold and talking destocking to half we is channel. the we that than in maybe call first of the can market, to goes end the of some end chain that is we users hence, what and would channel our that's be believe the revenues being some the in chains, are mean

Walter Please [Operator question Liptak of ahead. go next Instructions] from Seaport. The is

the the guys I business, seasonality, Good I destocking resi -- and morning, the want about to . to the your this. Thanks, understand I comments about wanted in of that ask make outdoor sure some

bit, So quarter? it -- of fill Like up the how has ended? here? fourth to then the a think the then that's little have how the like look? where some orders picked seasonality that's third in to right, does you the seasonality if me does destocking what if what's And quarter sounded And impact

Okay.

to revenue, destocking So impact, headwinds. great, right, Yes, our the a both is been not our greater the So has sell-through right? like but

of start is then inventory an load kind you get So quarter come you part to in in in into the of heavy the the the seasonality, -- the get and fourth to spring. down. grill but continuing typically The season initial

through of it been little mean, So of gone levels. I inventory as off this everybody year, bit mean has their I kind a we've

to to get So got all that's a level. normal

fourth So we next load-in you then to the end year. case into grill kind you the for get And get large, is think by the then the season going back in of some quarter, into and as of the year. that, the

Now we into do think next that retailers will be more conservative in that going load year. in

the So you with where we quarter past. fourth the as comparatives, our let's say, last started hit was of start you the year. grills be But it quite about getting thinking in really not to, may back in

not then -- wasn't largely maybe normalized think stocking brands, move to in and load that work have conservative right? will you you XXXX growth a But through So there, then into, different share more it of will maybe lead there I be there. there what was of XXX% that seeing if kind for you'll like was say, different massive the to healthier out sales got of the that season, inventory, in season. behind a season I'll meaning orders you period because have a and probably retailers, you So and a kind looks we're you destocking, going different lion's SKUs and

it said, now. So just -- that's had and to new I been lot I I great We're couple through. product they right with which highlighted they've keep we've launches, that has Joe, James also, here, being trying Konnected sold mean, of been well times a up a kind of of mean, received.

the well, gravity with I which connected mean, believe we series in -- built mean the So that think innovators the I we're got we're Charcoal think master I we've I excited on about. very as growth to a is with believe great of launches some got had we really a years which go will added we we've that next in into and products the category come, category, year. some as suite

expanding there. some of And we've space there deepening we've capabilities there. think say, floor I mean, some added our, I'll with I got So digital also some partnerships been marketing

you more a I portfolio getting have. as Grill of We're environment. kind forward I excited So normalized very we that to into look about think mean the

runway So we think there. got long we've a

Okay. great. That's

But could then very how us That size much help pretty of And how UK like versus is much. you called presentation, Europe the the risk the you clearly. I Brian, of just Thanks your Okay. of Europe. during helps. Europe out rest wonder if

A - Bryan Mittelman

Yes. fingertips majority don't quarter, of I'm Europe's for of at my of in excess a I strong The is have but breakdown past sure it. the revenue the the half right UK residential. for it's

you. right. Thank All Great. Okay.

Brooks And Benchmark the go next ahead is question Company. from Please of The Todd

Hey, everyone. good Thanks taking questions. morning, for the

builds just you've how in we and about the we're We're upgrade by now player talking I'm the that build standpoint. replacement to shift the eventually but now, driven new talked cycle First unit is an and on the new commercial. wondering scale more is very cycle. customer chain from driven past

and wondering either discussions commodity the rapidly fleet? is in pieces it largely broadly, customer to the is with if urgency in the or with thoughts with much food better equipment appetite? get that Or strong position standpoint specific some slowed more a easing. on that being cost attack the these of would you still for you phase staffed a in? upgrade environment Just labor appetite for of from from larger any have Is remodel customer when chain waste as think Does or or we're the upgrade the you that the get existing do labour

morning, Todd, it's Good Yes. Steve.

solve need So challenges, specifically labor. in out don't for call any has been slowdown there customers upgrade I think to

a maybe be to little continues cost say, has you last of number for those I restaurants, about. in finding great I the a which challenges which six employees, labor restaurants. better of gotten, give a When would over think bit it we areas about there's months I is think employees, The One, nuance. to elevated. think

doing would grill. thing out, James new of is the training Taylor some think the call that seeing adoption it, I job. third we're of the the actually with I And double-side technologies ease the the hit comes actually actually where these of around

example a nuance. it. it's of bit an I art think of more little is of There's a fun a the one great to this back It's grill, kitchen, least probably because piece in working a equipment. of another of the traditionally, jobs right?

and your position. to make it of level want obviously, the cooking grill your high hot appropriately you coming a And may be off that's training. very sure it's a chicken, greasy So stake, whatever also you're and

putting something the product a pushing to move and that can kitchen. training you're where eliminating you walking when the you're and the So jobs the Taylor easiest down, of like in one button becomes the Grill away,

restaurant terms a as though be I'm giving So major getting of nuance training. challenges that even of in there still better, you faces of and labor labor that may are parts every

start And demand see do kick next you about, first think, we we've pace maybe well think the store a that to still upgrade see year do on pent-up I half that answer second year. new I and strong into that next the builds, more to replacement into think in, question, that in of I continuing this think and your still I year. So of do talked and have you both half certainly, back

great. Steve. And then That's Thanks, --

I think sorry, well, it going it. add to but I'm I'm answered Steve just

turnover the It's you dramatically, which right? untrained, improved don't think challenge. is a challenge has right, -- to customers of it major staffing today. I And big that get and a because though leads restaurant always is bigger in most a believe going point, you even was And even issue, of Steve's people they're So kind bring away.

again, where So to easier equipment. smarter, need you use that's, have to automated

that footprint about tied you're issue to in which always delivery, I labor. really have The other of which service, challenging that drive-through back is right? kind The need -- about major you and of throughput as has today. thing, we've and of spades, if more think maybe a come you talked a in speed the been you something has lot mean smaller customers is

lot have solutions we problem for of the that solved a that well. So as I mean I think

there hence, the continue out to automation. seek So

to question. both. then great. a final just And you That's Thanks

supply chain, we be As us to of like Thanks. you're seeing but year? your that you that as margin towards could early signs forward of for any relief looking commodity the through you'd back the basket, the the enhancing B) point go at what's picture availability look are want A) through half

Hi. It's James.

headwind that It's still tend the some products just availability see general are customized nagging be I of been to of tend are components there, steel, slow and XX, XX around where the think kind a year of just highly Those items, down. also kind on be items The things anymore. a old motors specialty we and electrical but kind don't that silicon that, to of issues that we've challenge. have in large, of got chain, legacy here We board. legacy fairly or by as the pockets can supply like these us kind of they strong. see controls motors typically copper, around and

good see and pockets but of guidance kind how So on us of XX affecting here our we that's availability. supply there, kind in generally chain

on more things for And into available have any cost outlook the readily of 'XX. we as that headed become metals, core kind are

at down we going are the levels continue them to slightly. or see they I think

Perfect. Thanks, James.

The is next Genuity. McNamara Cannacord Please from question ahead. Brian go of

half yourself hear like that know brand thoughts I'd the of your that and Thanks on for Brian, morning. an grills we of of driven I the awareness, to and expecting you I through. partners had just checks mentioned, me, kind back to by want I the curious, I'm retail know, were of that opportunity, like know below on good sounds selling what you question. bit associates perform, primarily brands that. even think Grills. love you talked or Hey, Thanks. taking the to think but in little store. don't your just some I they're just you to the simply I'm circle guess, curious, that's a do

That was talking but the was sell-through this is Bryan -- before. Tim as about now,

we that brand our us a we of traffic do mean I that opportunity. other of think think I sites, certainly, on Grills, look I seeing some gives really the at impressions and ones are overall, We our are there. out are growth to we trajectory the mean, of tons Internet smaller around brands. and than great stats

trends really, Kamado benefits we're the out positive the through really and Konnected part get comes the all well. around that there. still after. there space is growth you is this But charcoal noted, There that is reason As There's I still in that. think Tim of through selling opportunities

why gets to inventory separate over this bullish for again, of are mean, to a managing for things I short come, from long time. how of we relatively So levels a time period after period

I mean, the is Yes. growth been think a I think comment softer mean I -- I it season. has

grills. It's retailers product you a think right? not in to mean, If a just that's for of lot the the calls major listen their right. lot categories, true I I of

that some for a new are awareness, we the and and the right? we a there's expanding are we innovation brand, think do of relatively charcoal So And greater category. attraction

talk one and to door could the may certainly, I So we in on as floor, well. not and mean, two, we're new every be yet you or

in that opportunity think the and opportunity what So part do go-forward growth up as do system, coming provides be normalize in I of locations mean to kind they then whole show expect we're we'll to . may of but that's inventories of the more I basis. a retailers system want kind of the and for across that more as who not we that kind would into them an display on

Thanks lot of guys. a Best luck.

you Thank

question last That is for our today.

to I'd for to remarks. the Now back closing turn management like call

thanks of look speaking everybody today's after call quarter. the I'd to, third you just on joining like again, and us end for to once to forward we

The conference for has attending now concluded. today's you Thank presentation.

may You disconnect. now