Middleby reported earnings today for the quarter ended in June, which is in the heart of the grilling season. The news for their outdoor segment, which includes brands like Kamado Joe, Masterbuilt, and Char-Griller, was I’ll call it incrementally positive. There were some positive signals, but still some disappointment.
The grill season has been slower or maybe not as strong as some of our customers and us would hope. So I think there’s — and they’re also kind of watching the p’s and q’s with inventory levels and cost of capital. So they’re in a good stocking position. So I think from that standpoint, we’re positioned as we do go into restocking. So it’s kind of a healthy level right now. There is an opportunity as we kind of go later into the year to see how they’ll — they’re better positioned going into the fourth quarter this year than last year in terms of stocking levels.
Tim FitzGerald – CEO of Middleby
Judging by Tim FitzGerald’s comment, I suspect that we’ll hear a similar story from retailers as they report earnings over the next month. While the season hasn’t been as strong as they hoped, there still has been some improvement.
Other brands, like Traeger, got in-front of their inventory problems more quickly coming out of the pandemic. Middleby’s seemed to lag a little more, but now it sounds like overstocks aren’t an issue anymore. That’s a positive for them heading into next year.
Middleby also has seen positive order trends for their Residential business overall, but also specifically in the outdoor segment.
One last point, just to make sure it’s clarified, I mean, because you did ask about outdoor, even though it’s, I’ll call it, a modest part of the total segment. But our order trends being up have included the outdoor brands as well. So think we have seen positive evolution of the inventory that’s stocked for that, I’ll call it, subcategory within residential.
Bryan Mittelman – CFO of Middleby
Home sales and high interest rates are a problem for all grill companies, but Middleby’s Residential segment includes many indoor brands that are even more sensitive to those macro factors. They noted in a recent investor presentation that they think we’re past the bottom for the housing market, and that interest rates will start to be cut in September.
The good news from that is there should be higher levels of demand in the future. Middleby noted that they’ve already seen some improvement in the luxury end of the market.
At our Residential business, the housing market remains challenging with very low levels of existing home sales, new home starts and remodels, while this is having a significant impact to our business today, we believe it will ultimately lead to pent-up demand with the benefits of a recovery in the years ahead. And while the residential market will take time before we recover, the luxury end of the market has shown recent improvement. We realized order growth in the second quarter and expect that will continue to progress through the balance of the year.
Tim FitzGerald – CEO of Middleby