My wife is an interior designer and for the past few months I’ve been listening to her complain about the shortage of kitchen appliances for her clients. Many are quoting 1yr+ lead times for new stock to be manufactured. This was due to everything shutting down during covid. I’m not sure if there is a play here because most of the luxury brands are privately owned, foreign or a subsidiary of a much bigger company like whirlpool/samsung/etc. I did find one ticker that was publicy traded and focused mostly on cooking appliances which is Middleby Corporation, MIDD (brands you might know that they own are viking and la cornue).
I’m not smart enough to do a proper DD but im curious if theres a play to be made here post covid? Looking at their chart their stock took a big hit in in march 2020 which is around the time covid went rampant but has been on a steady climb back up. Analyst seems to be bullish on the company. Again I’m not sure if there is even any play to be made (calls or puts) but just wanted to bring up this supply issue to the greater group of smart folks who might be able to find something.
One way to try and approach this and to try and find out if it’s priced in or not is to look at what happened to their stock price from their previous earnings and if that report already included supply chain issues and lowering future guidance.
It seems like overall it was a good earnings report since they reported an increase in net sales. They also saw an increase in organic net sales. They are reporting a record backlog of $1.4 billion. Not sure if that is bullish or bearish since I assume that money is already counted in the revenues? Looking at the stock price it shot up to a high of 201 right before earnings and then sold off and is currently at 166. So seems like the good earnings was priced in already
Cash balances at the end of the quarter were $180.4 million. Net debt, defined as debt excluding the unamortized discount associated with the Convertible Notes less cash, at the end of the 2021 fiscal fourth quarter amounted to $2.3 billion as compared to $1.6 billion at the end of fiscal 2020. Additionally, our current borrowing availability is approximately $2.2 billion.
“We continued to realize strong order demand across all three segments, and we are carrying a record backlog exiting 2021. While we continue to implement our long-term growth strategies, we remain heavily focused on meeting existing customer demand and managing operational challenges driven by supply chain limitations and disruptions. As we enter 2022, we have made investments in inventory, people, fabrication equipment, and facilities, in a concerted effort to support our backlog and pipeline of developing business opportunities. We are experiencing further increases in material, labor, and shipping costs as inflationary pressures persist. This has led to proactive price increases for our customers, offsetting these significant cost pressures. We are actively managing the margin impact on our business in the near-term and remain committed to progressing our long-term profitability goals in 2022,” concluded Mr. FitzGerald.
Looks like they took on a ton more debt also to invest in building out their infrastructure to meet existing customer demands. They also increased prices to offset inflation