Good morning. Thank you for attending today's conference call.

I'm Tim FitzGerald, CFO of Middleby Corporation. And joining me today is Selim Bassoul, our Chairman and CEO.

The first quarter results reflected the impact of acquisitions completed during fiscal 2011, including the second quarter acquisitions of Beech and Lincat; the third quarter acquisitions of Auto-Bake, Danfotech and Maurer-Atmos; and the fourth quarter acquisitions of Drake and Armor Inox. During the first quarter of 2012, we also completed the acquisition of Turkington U.S.A..

The Turkington acquisition was completed on March 13 and therefore was only partially reflected in the results of the quarter from the date of acquisition.

Net sales in the 2012 first quarter of $228.8 million increased 25.3% from $182.6 million in the first quarter of 2011. Sales growth from acquisitions accounted for $36.5 million or 20% of this increase in the quarter.

Excluding the impact of acquisitions, sales increased 5.4% over the prior-year quarter. This increase reflects a 6.2% increase in our sales at our commercial foodservice group and a 1.3% increase in sales at our food processing group.

At commercial foodservice group, we continued to realize growth in chain sales resulting from the adoption of new products and technologies with numerous restaurant chain customers, while international sales growth amounted to 2.2% in the first quarter, reflecting the timing of large projects in the first half of last year and slow sales in Europe. While we expect to see variability in sales in the emerging markets, we anticipate that we will see continued momentum in the emerging markets during the year as restaurant chain customers continue to expand globally and through increased sales penetration as a result of continuing investments made in our international selling organization, although we anticipate we may see continued softness in sales to European markets due to economic conditions.

At the food processing group, we continued to see strong order rates in the first quarter, which has resulted in an increase in backlog. We realized the revenue growth in the first quarter as those orders begin to translate in revenues, and we anticipate that revenue growth in this segment will increase in the second quarter and remainder of the year.

Gross profit for the quarter increased to $87.5 million from -- as compared to $71.8 million in the prior-year period, reflecting the impact of higher sales volumes. The gross margin rate declined from 39.3% in the first quarter of 2011 to 38.2% in the first quarter of 2012, reflecting a higher mix of sales at the Food Processing Equipment Group, which has a comparatively lower margin due in part to acquisitions completed within the past year as we complete our efforts to integrate those businesses.

The gross margin at the Commercial Foodservice Equipment Group was relatively consistent at 40%, as compared to 40.3% the prior year, while gross margin rate at the Food Processing Equipment Group declined to 33.5%, as compared to 35.1% in the prior-year quarter, due to lower margins at the recently acquired companies. In comparison to last year, we anticipate the gross margin rate will continue to reflect the impact of the lower margins at the food processing group in future quarters but expect those margins to improve as we complete initiatives to integrate those recently acquired businesses.

Selling and distribution expenses during the quarter increased $12.6 million to $25.2 million. Selling expenses in the quarter included approximately $4.4 million of additional expense from the acquisitions completed in the last 12 months and not included in the prior-year first quarter results.

Excluding the incremental expense of acquisitions, selling costs were relatively constant with the prior year.

General and administrative expenses increased by $5.8 million to $25.6 million in the first quarter. General expenses included additional expense related to the 2011 acquisitions, which amounted to approximately $4.4 million.

This includes $2.5 million of increased noncash amortization expense related to intangibles from acquisitions. The remaining increase in general mix -- in general and administrative expense in comparison to the prior year primarily relates to higher noncash stock-based compensation.

Provisions for income taxes amounted to $11.2 million at a 33.7% effective rate in the quarter in comparison to $11.6 million provision at a 39.5% effective rate in the prior-year quarter. The first quarter tax provision reflects nonrecurring reserve adjustments related to the reduction of state tax exposures, which favorably impacted the rate by approximately 3.9% in the first quarter in comparison to the prior year.

The first quarter rate also compared favorably in the prior year due to lower effective rates on increased foreign earnings and increased deductions for U.S. manufacturing activities, which are expected to continue in future periods.

During the quarter, the company also continued to realize a cash tax savings associated with the utilization of net operating losses acquired from TurboChef. This tax benefit will amount to approximately $6.4 million for the full 2012 year and is not reflected in the tax provisions as it's been recorded as a utilization of an asset in the opening balance sheet from the TurboChef acquisition.

Net cash from operating activities in the first quarter amounted to $10.8 million, as compared to net cash used in operating activities of $9.5 million in the 3-month period of the first quarter last year. Consistent with prior years, first quarter cash flows are impacted by the payment of prior-year annual obligations related to customer rebate and incentive compensation programs.

Additionally, we typically utilize cash in the first quarter as we build working capital levels moving into the peak second and third quarter periods.

Noncash expenses added back in calculating operating cash flows during the first quarter of 2012 amounted to $9.8 million, including $7.1 million of depreciation and amortization and $2.7 million of noncash share-based compensation. In the 2011 comparative quarter, noncash expenses amounted to $6 million, including $4 million of depreciation and amortization and $2 million of noncash stock-based compensation.

In the quarter, the company utilized $10.3 million to fund the acquisition of Turkington U.S.A. and made investments of $1.6 million for capital expenditures related to production equipment and facility enhancements.

The company also utilized $11 million to repurchase shares of its common stock that were surrendered to the company by employees in lieu of cash payment for withholding taxes related to restricted stock vestings and stock option exercises that occurred during the first quarter of 2012.

Total debt at the end of the quarter amounted to $317.3 million (sic) [$316.6 million] and total cash amounted to $40.2 million (sic) [$28.7 million], as compared to debt balances at year end of $316.6 million (sic) [$317.3 million] and a cash balance of $28.7 million (sic) [$40.2 million]. Cash balances declined from year end as cash held at recently acquired foreign entities were utilized to repay debt.

We anticipate that we will continue to reduce cash balances in future periods as we access cash at our recently acquired international operations. The company's debt is financed under its $600 million credit facility, which matures in December of this year.

And the company is currently in discussions with its banking partner and expects to enter into a similarly structured facility in the next several months.

Nick, that's all for the prepared commentary. Can you open up the call to questions?

2 questions. First, I think you -- Tim, I think you implied that international sales comparisons, organic international sales comparison, should improve as we go forward.

But given the fact that, typically in the foodservice sector, those comparisons were nominally up in the first quarter, unless you're assuming some improvement in the European economy, I wonder what gives you that confidence.

Well, Tony, I guess I was -- we think that we're going to continue to grow in emerging markets. I mean, last year we grew double digits throughout the year.

Clearly, there's some softness in Europe and that detracted from our growth in the first quarter, I think. I think that will -- we'll probably likely see some continuing softness there during the year, but in the kind of the rest of the world, Latin America, Asia, Middle East, we're still seeing strength there.

It was a little bit softer in the first quarter just due to comparisons, but we -- we expect that those markets will grow a robust rate for the -- during the 4 quarters of this year.

Okay. And second question.

Again looking at organic comparisons, gross margins in both divisions appear to be kind of flat. And given the fact that your steel costs, I think, are down year-over-year, I'm wondering why there wasn't at least some improvement in gross margin.

Well, the gross margin in first quarter was primarily affected by the mix between the commercial foodservice group and the food processing group, so that...

Yes, but generally, the gross margins just in the foodservice area were flat and so were gross margins in the food processing area...

Yes, well, the food processing group is affected by these -- I mean, we did 6 acquisitions in the food processing sector in the last year. And those businesses, when we break them -- as historically has happened, are -- tend to be at lower margins, and then as we integrating them head up.

But there was some contraction in the gross margin on the food processing business when you think of the acquisitions that we've just completed. And we'll spend a fair amount of that to secure integrating those businesses.

And as we...

I think you broke out gross margins excluding the acquisitions, and those were flat. Were they not?

No, that includes the acquisitions. So the gross margins were slightly down because of the acquisition.

And in food processing -- on the commercial side, the margins were flattish at 40%, and that is -- that mix can change from quarter to quarter. So that wasn't necessarily the contraction in the margins, but it was really just the natural quarter-to-quarter impact of product mix.

Tony, I would like to step in also to tell everybody that the cost [indiscernible] -- our raw material costs were not down as we expected it to be. We expected to have a much more reduction in steel prices than we expected, but ultimately it did not work.

So our reductions in the first quarter were not as drastic as we expected them to be. And the surcharge on steel continues to be challenging for us, and I think some of the other raw materials that we've done, we've seen this is not abatement as we expected it to be in raw material cyclings.

Okay, that's true. And Tim, lastly, are -- is your effective tax rate going to be a point or two higher for the balance of the year than in the first quarter?

Yes, I would generally anticipate that kind of the -- that the normal run rate of tax rate would be higher. The first quarter did benefit from some reserve adjustments.

And our effective rate continues to move down over time, but we did get some onetime benefits.

I guess the first question, if we can just talk about Turkington for a little bit. Can -- Tim, can you give us the kind of what's the revenue base for the businesses?

And then Selim, if you could talk about strategically how that fits into the portfolio and kind of what the leverage is from that business, that would be very helpful.

Yes, Pete, historically, that's been a $20 million to $30 million revenue business. It'll probably be a little bit lower as we kind of -- it was an asset acquisition, so we'll be rebuilding a backlog and portfolio kind of as a new business, but that's historically a $20 million to $30 million revenue business.

Peter, what is the interest of that platform for us: with the acquisition of Auto-Bake and now of Turkington, we become a real player in the baked goods business, which includes -- which becomes -- puts us in most probably a #2 or #3 position globally in that business. What I like about this platform is the fact that baked goods is a trend not only in the United States but mostly in emerging markets where, literally, people are going from locally -- local bakeries with heavy labor to processed -- factories where they process baked goods at much lower price and better quality.

So as I look around that platform, I see that platform being a great introduction in growth in emerging markets. And I like the fact that this platform is being consolidated.

And today, if you're a small player in that platform, it's hard for you to be able to go globally. So I like the fact that we now continue to consolidate that platform and come up to become a #2 or #3 player in that platform.

I like the growth span and the growth future of it. I like the fact that it's a international platform.

I like the fact that people tend to invest in baked goods. It's not going away.

We, as human nature, like our sweets and we like baked goods. So whether it's taking them to school or taking them for casual dining restaurants or quick serve, there are a lot of potential in that market.

Okay, and is there -- can you give us a feel as to what the potential market opportunity there is for you, how significant size the market might be?

I think that market could easily be, for us, literally a $100 million to $200 million market, just with the companies we have today. So we could go from being a $40 million to $50 million player to almost tripling our revenue within the next 4 to 5 years in that business.

It's a nice business for us. It's -- again, the issue with that business, similar to food processing, is the fact that the purchase equipment is pretty large.

So you're talking about multimillion-dollar purchase. But I see us looking at places like Saudi Arabia, Thailand, China, India where we're seeing a lot of activity in baked goods.

Okay, all right. And then, Tim, if we could just switch back over to the commercial business.

Can you give us a sense as to what the pricing trends there look like? Anything of meaningful change in terms of pricing and your ability to get price in that market?

There -- yes, we had -- our prices increase generally at the start of the year. That was in the 3% to 5% range, and generally we believe that, that's -- we're getting that across the market.

And it's safe to say that you're getting it across both domestic and international, is that fair to say?

Yes, that's fair to say.

Okay, all right. And then the last question, if I could.

The -- I think the dry powder on the buyback is basically gone at this point. Any thoughts about a new authorization, share repurchase authorization?

Are you talking about from the credit facility, or just the amount of shares that's...

No, I -- a share buyback. If my math is right, you're getting pretty close to having that fully exhausted.

So I'm just wondering if there's new plans for a new share authorization plan.

Yes, I think that, that would be something when that's exhausted, that, likely, we would discuss at the board, and that would -- we'd likely reinstitute some ability to do that on a go-forward basis.

I wonder if you could talk about the current acquisition pipeline, if the focus is still mainly on the food processing side or if you're seeing some opportunities now on the commercial side.

I would like to address that, Jason. I think we continue to see activities in both.

I think we're starting to see the acquisition pipeline to be active on both sides. The key is to make sure that it's something that fits us.

We have been able to walk away from a couple of acquisitions because either the fit was not perfect when we did the due diligence or the pricing did not fit to be accretive for us. So I think the acquisition pipeline is very active.

And we'll start to see activity also on the commercial side of the business. And I think, in 2012 we will most probably see activity both domestically and internationally both on the commercial side and on the food processing side.

Okay. And Tim, do you have an estimate for CapEx and D&A for 2012?

Well, CapEx has historically been 1% to 2% of sales, so we anticipate that, that will be roughly at 2% or less of sales going forward. So that's pretty consistent where we've been historically.

I don't have -- I -- we don't give a forecast on depreciation and amortization. And I think that -- in particular, that's affected by the amortization of acquisitions, which we still have numerous recent acquisitions and that can still move somewhat from quarter to quarter.

But generally, and the first quarter we laid it out, it was $7 million of amortization and depreciation. I would -- we don't -- that did not include amortization from Turkington, which at this point -- we just completed that acquisition, so that's why -- we don't have a forecast for that as we complete the valuation for that.

But the $7 million that's there for prior acquisitions and existing companies would likely trend down over time as we fully amortize certain intangible classes.

Okay, that's fine. And then finally, Selim, if you could talk about SPINFRESH, how the testing is going with customers and then any other new products that were especially noteworthy in the quarter.

Yes, I think that SPINFRESH is -- continues to get a lot of attraction. This is the first quarter that it's gone into production.

The first quarter was the first -- I mean, in January, February, it was ready for -- literally to be sold. It's now being able to be mass produced.

We just came back from the National Restaurant Show this week and it was the hot topic at the show. It was -- people were standing around it.

Everybody is looking at calorie reduction and the fact that it can decrease oil consumption. So we've got a lot of interesting concepts.

We've sold a few units right now as we speak. And we have a couple of tests in existence right now, and we're monitoring it very carefully.

I think that this product seems to have a lot of interest right now, especially at the show. We had people looking at it, testing it, wanting to put the testers in their store concept.

In addition, we came up with a countertop unit, which just comes at the heels of what we produced, which allows people to basically take a countertop -- a lot cheaper mode of the valued production. So if you just bought fryers from us and you don't want to buy a new SpinFry, that we produce a countertop unit that was also patented and also well received at the show.

So the biggest question we had is, as we grew our fryer business over the last 5 years, a lot of customers come back and say, "Wait a minute. I just bought -- retrofitted all my fryers from Pitco in my chain.

Now you introduce this. What can I do?

I don't want to throw away those fryers and end up buying a SpinFry." So having put it in this countertop was very, very exciting to many of our existing customers.

The other product that was very well received is the TurboChef G5, which now takes us from literally going from a single shelf to a 5-shelf. So now we can go to a batch cooking and it widens the application of TurboChef into a lot more application.

That was extremely well received. Now of course, the CTX wall oven combination that is now being -- that we partnered with Brinker at was also the talk of the show.

In fact, if you go online, the Chicago Tribune put it on the front page of their business section on that date, it was on Tuesday, May 8, as being one of the hottest sellers. They've seen the people around it.

They talked to many of potential customers who were very interested in that platform. And of course, our Hydrovection oven from Blodgett continues to be growing extremely fast.

If you remember, this is an oven that was used by KFC 3 years ago to introduce the grilled chicken concept. And now it's become -- into the general market, it's been very well received.

And then, our ventless application, we had a lot of new ventless equipment both in terms of universal ventless hoods as well as countertop ventless equipment were very well received. So again, I repeat: the TurboChef G5; the SpinFry; the CTX wall oven that's used by Brinker; the ventless application, which is growing extremely fast; and our Hydrovection ovens.

Now on the Kitchen Innovation Award, we had Lang introduce an on-demand burner, which was very well received. And then we had a Dipper dish that was introduced by Wells that got also a Kitchen Innovation Award.

That saves thousands of gallons of water, and this is being tested now by several chains.

This is Sid, standing in for Jamie. My question was on the commercial food segment.

The operating margin in the first quarter of 2012, it was down 100 basis points versus last year. What were the major drivers there?

Well, we would have had higher intangible amortization expense related to acquisitions. So that would have been one of the primary drivers.

Okay. And any updates on the casual dining rollout, the kitchen line efforts?

Any change to the current rates of rollouts of any new projects?

At this moment, we continue to rolling out our Kitchen of the Future, which I call -- we call it the Kitchen of the Future, with Brinker, and done around 150 stores right now. And we continue rolling out this new equipment package which automates the kitchen of the casual dining segment.

And we continue to work, spend a lot of time with Brinker. And as we dedicate all our resources for Brinker, we're seeing a lot of interest from other casual dining chains.

But I've been very, very focused on making sure that the Brinker staff works well. They are our #1 partner right now, and we're committed to making sure that, as we roll out more than the 150 we've rolled out in the second quarter and in the second half of the year.

We're spending a lot of energy on making sure that, that goes very well.

Okay. Coming to the food processing segment, can you provide orders for the quarter or a book to bill metric for food processing?

I'm sorry. Could you repeat the question?

For the food processing segment, can you provide what sort of orders did you see during the quarter on a book-to-bill ratio for the quarter for food processing segment?

Okay. Well, we don't disclose our exact orders, but we did see double-digit order growth in the food processing segment.

So it continued to have pretty strong rate from the fourth quarter into the first. And we saw it continue to build in the backlog.

I would like to give you a little bit of a flare of what's going on in the industry as we came back from the National Restaurant Show, which was one of the best shows I've seen since the pre-recession. I think we've seen the biggest number of customers and operators coming to the show.

We were mobbed -- I -- literally, a lot of people were looking at our kitchen innovation or a lot of people are looking at energy. They are looking at waterless appliances.

They are looking at ventless application. The interesting part that I've seen is, I've seen some 5-star or niche-line star chefs looking at introducing concepts that are value proposition.

So we saw a lot of interesting people. For the first time in years, actually, people are looking at opening up new concepts.

And it was very, very exciting and optimistic.

For the first time, I am very optimistic about seeing unit growth across many concepts accelerating. While we don't expect to go back any time soon to the pre-2008 overgrowth, we are seeing growth in 2012 through -- across the board.

So I'm seeing every concept now going back in the U.S. and starting to open stores.

Part of that is the fact that franchisees bank funding is widely available and inexpensive. Lenders are actively -- despite the tight lending environment, lenders are actively looking to lend money to franchisees.

We are back to seeing interest rates in the mid-4% to 5% range to many franchisees of Dunkin' Donuts, of Chick-fil-A, of McDonald's, of Burger King, of Papa John's. And this is very encouraging for those people to start opening up stores again.

Now again, remodeling of stores are definitely continuing. Whether they are remodeling the front of the house, the back of the house, it's starting significant equipment sales for us.

We continue to see meaningful acceleration of same-store sales across our capital base. This acceleration is driven mostly by increased traffic versus just ticket sales.

This is the result of new value launches and advertising campaigns. And I think the fact that most concepts have seen their same-store sales go up.

And as you know, many of them inflict a percent of sales per store on their franchisees to go towards advertising budgets. And as their percent of sales go up, the sales go up, the percentage toward advertising goes up and it gets funded at a higher pace.

Another positive news about our customer is the number of recent debt refinancing that corporation are having, with annual interest payment being reduced substantially. We see this as a meaningful as the cash can be redeployed towards more productive uses such as restaurant remodels and kitchen upgrades.

So literally as the environment got better, many of those chains are refinancing their debt at lower cost of capital.

Food costs continue to be a challenge for many of our restaurant operators. And just recently in the first quarter, the price of beef was way, way up.

So many concepts are refocusing on reducing their labor costs, which works very well for Middleby. This is a sweet spot for us as we help literally through our equipment to reduce cost of labor in the kitchen.

So one of the initiatives we've had was casual dining, it's reduced 1 or 2 people out of their store -- out of their kitchen, which has been a huge payback in reducing the operating costs.

As I just mentioned, the casual dining segment continues to perform better due to improvement in the macroeconomic backdrop in the U.S. Most casual dining stores are in shopping centers or mall -- or malls, making it particularly sensitive to macroeconomic factors.

We see this segment improving and looking for ways to drive traffic and to lower operating expenses. Food quality and consistency is the main theme of this segment, and it's a big emphasis for us.

And this is -- has been why Brinker has seen that foods costs get better and drove more traffic to their store as they redesign their concept.

So we believe that 2012 is shaping up to be a solid year for Middleby with key earning drivers and organic growth. Our international growth in emerging markets will continue to be 20% and above, as we continue seeing.

In the past 5 years, it was 20%, and we continue seeing that. Our food processing platform will continue now as we integrate the acquisition we made.

As Tim just mentioned, we just did 6 in 2011. We will see that platform driving our earnings growth as we integrate it in the next 12 to 18 months.

Finally, our new products that I just mentioned, from TurboChef, to this Pitco spin fryer, to the CTX, to the ventless from Wells and CookTek, to the Hydrovection and Land and Star will continue providing significant margin improvement as we look forward because the payback on those products are less than 18 months for each one of them.

While the food processing remains a smaller piece of our business, orders coming in, in the fourth quarter and the first quarter will drive the organic growth in the second half of the year. The simple question is, how does it -- how do we compare versus the broad market?

So we continue to see significant rollout of initiative and opportunity for us as we've seen the testing of our new products in 2011 driving sales for us in the second half of this year.

Despite the fact that Europe will be disappointing and challenging for us, I think we'll continue to see international offset the decline in Europe through Asia and Latin America and Middle East. Even if the U.S.

goes down in the second half due to macroeconomic, which I do not forecast that to occur, Middleby will continue to drive its organic growth through rollouts that are already in process in the second quarter and the third quarter of this year.

Steel prices continues to be and raw materials continue to be challenging. As the economy has performed better, the demand on steel has improved, and that has put pressure on us from a cost pressure on our raw materials.

Steel prices continues to be 12% of our sales, so it can most probably offset the increases, and so that doesn't impact our margins.

This is all for my prepared comments. Thank you.

Okay, thanks, everybody, for attending today's call. We look forward to speaking to everybody at the end of the next quarter.