The Middleby Corporation (NASDAQ:MIDD) Q4 2023 Earnings Call Transcript

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Jeff Hammond: Okay. And then Steve, you mentioned one of the growth drivers being kind of this pent-up replacement cycle. And I’m just wondering, what you hear from customers on that and what it really takes to kind of get some of that catch-up on the replacement cycle going?

Steve Spittle: Yes, no, for sure. So, again, this is my perspective on the replacement cycle, as I think we were due for a replacement cycle going into COVID, and then obviously COVID kind of kicked the can through supply chain. And then a lot of the focus from the chain customers again down new stores. And so, I think as we get into this period now where, yes, new stores are still important, they do realize that they have to go back into locations where the equipment has aged making sure, again, common theme of making sure franchisees remain happy. We’re also in a much better position compared to a couple years ago to be able to fulfill demand from both a new store and replacement cycle. So, I think that was a big dynamic the last couple years of, they were just prioritizing getting new stores open knowing equipment was — have longer lead times.

So, customers are definitely engaging with us on replacement, conversations making sure that we have products ready to go for them at any time. So, I do think you see our demand mix of — we’ve shared it, between replacement and new stores shift back to be more and more predominantly driven by replacement and upgrade. I want to just hit on just the nuance of, it’s not just replacing a like for like, what I think you’re going to see them do is predominantly upgrade to newer technology, technology that’s able to be connected, new controls, so that gets kind of lumped into replacement and upgrade as well. So, I think that starts to get back to being — it’s historically been 50% of demand for us overall, I think as you go out the next two or three years, I think it gets back to kind of those levels overall.

Jeff Hammond: Okay. Thanks a lot.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Tim FitzGerald: Thanks, everybody, for joining us on today’s call and we look forward to speaking to you next quarter.

Operator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.

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