Middleby Corp (MIDD) 2013 Q1 法說會逐字稿

Thank you for joining us to The Middleby Corporation First Quarter 2013 Conference Call. With us today from management are Selim Bassoul, Chairman and CEO and Tim Fitzgerald, Chief Financial Officer. The format for today's call is starting with prepared comments from management, then opening the call to questions. Instructions will be given at that time.

Now, I would like to turn the call over to Mr. Fitzgerald for his opening comments. Please go ahead, sir.

Okay. Thank you and good morning, everybody. I have some initial comments about the quarter and then I'll open up the call for questions for Selim and myself.

Net sales in the 2013 first quarter of $327.5 million increased 43.1% from $228.8 million in the first quarter of 2012. The first-quarter sales reflect the impact of the acquisitions completed in the past 12 months, including Viking, Nieco, Stewart Systems and Baker Thermal Solutions. These acquisitions are not fully reflected in the prior-year comparative results and accounted for $74 million in sales or 32.3% of sales growth in the quarter. Excluding the impact of these acquisitions, sales increased 10.8% over the prior-year quarter. This increase reflects an organic sales increase of 8.6% in sales at our Commercial Foodservice Group and 18.4% increase in sales at our Food Processing Group.

At Commercial Foodservice Group, we continue to realize growth, driven by increased sales to restaurant chains looking to upgrade equipment and adopt new technologies to improve efficiency of store operations. Sales in emerging markets also remained strong with growth in excess of 20% in Asia, Latin America and the Middle East. Sales in Europe continued to decline due to challenging market conditions. However, the rate of decline lessened from prior quarters as sales in this region were down approximately 5%, which adversely impacted the Commercial Foodservice growth rate by approximately 1% in the quarter.

Sales at the Food Processing Group continued to realize double-digit growth, both domestically and internationally, reflecting demand by food processing customers looking to modernize existing production operations and new customers developing operations in international markets. While we anticipate continued strength in sales at this segment, we anticipate growth rates, which were particularly strong in the second half of the year, will moderate in the second half of 2013.

Sales at Viking amounted to $58.7 million during the first quarter and reflected general improvement in industry conditions. We anticipate that sales in the second and third quarters will be impacted by integration initiatives, including the disposition of non-core revenue streams, the discontinuance of low-volume and low-margin SKUs as we simplify the business operations and temporary disruption in distribution channels as we restructure and improve efficiencies in our sales and distribution processes. This will result in lower second-quarter sales that we estimate will be closer to $50 million in the upcoming quarter, with the second half of the year reflecting the initial benefits of the ongoing sales and product initiatives.

Gross profit for the quarter increased to $121.3 million from $87.5 million in the prior year and the gross margin rate was 37% as compared to 38.2% in the prior-year quarter. The gross margin rate reflects the impact of the recent Viking acquisition, which carried a 28.5% gross margin in the quarter, adversely impacting the overall gross margin rate by 1.9%. The lower margin of this business will continue to dilute the overall gross margins for the balance of the year by 1% to 2%. However, we anticipate the Viking gross margin will improve in the second half, reflecting the benefit of purchasing savings, SKU simplification actions, gains in production efficiencies and other ongoing initiatives benefiting the gross margin rate.

Selling and distribution expenses during the quarter increased $11 million to $36.2 million. Selling expenses in the quarter included approximately $12.1 million of additional expense from acquisitions not included in the prior-year results. Excluding the incremental expense from acquisitions, selling costs were slightly less in the prior year due to lower costs associated with the timing of various trade shows and marketing programs.

General and administrative expenses increased by $17.3 million to $42.9 million. G&A expenses for the quarter included $5.6 million of additional intangible amortization related to Viking and other recent acquisitions. Other ongoing operating expense increase is related to Viking and other recent acquisitions, which added to G&A expenses during the quarter amounted to $4.2 million.

Additionally in the quarter, G&A expenses included $6.8 million of non-recurring expenses associated with the integration initiatives of Viking. These costs are largely comprised of severance costs, non-core asset disposition and facility closure costs and other related reorganization costs. We anticipate there may be additional expense occur in the second quarter as we complete our integration activities that are related to Viking.

The tax provision in the first quarter amounted to $12.6 million at a 32.8% effective rate as compared to the prior-year provision of $11.2 million at a 33.7% effective rate. The first-quarter provision reflects a favorable benefit of increased income in lower tax rate state and foreign jurisdictions as well as increased benefit related to certain U.S. tax credits and incentives. We anticipate that the effective rate will be somewhat higher for the balance of the year with an effective rate closer to 35%.

Our cash flows for operating activities amounted to $13.5 million in the quarter as compared to $10.8 million in the prior quarter. Non-cash expenses added back in calculating operating cash flows amounted to $17 million in the quarter, including $9.8 million of intangible amortization, $4.2 million of depreciation and $3 million of non-cash stock-based compensation.

During the quarter, the Company utilized $377.8 million to fund the acquisition of Viking and other acquisition-related activities and made capital investments of $3.9 million related to production equipment and facility enhancements. Total debt at the end of the quarter amounted to $638.4 million as compared to $260.1 million at the end of the prior quarter, reflecting an increase to fund the Viking acquisition.

The majority of the Company's borrowings are under its five-year $1 billion credit facility, which was established in August of 2012 and borrowings under this facility are assessed at an interest rate of LIBOR plus a margin of 1.75%. As it relates to the Viking acquisition, we are very pleased with the progress made during the first quarter to reduce product and operating costs to enhance focus on product quality and customer service and realize synergistic opportunities with our commercial Commercial Foodservice business.

The Viking acquisition, including the first quarter non-recurring charges, diluted earnings by approximately $0.30 per share and we anticipate we'll continue to dilute earnings in the second quarter. However, we continue to expect this acquisition will be accretive to earnings in the second half as we realize the benefit of profitability improvements.

We anticipate that the EBITDA margins, which were approximately 12% in the first quarter, will improve throughout the year with a slight improvement in the second quarter and reaching 15% or better in the second half of the year. And we remain confident in our initially-stated expectation that we will achieve EBITDA margins in excess of 20% for this business and are targeting to reach this run rate in 2014 ahead of our initially stated three-year expectation.

So, that's all for our prepared commentary. So, if the call could be open for questions now, that will be great.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Tony Brenner, Roth Capital Partners.

Thank you. Good morning.

Hi, Tony.

Hi. The integration cost for Viking was $6.8 million and I think, Tim, you said the related amortization cost was between $4 million and $5 million, is that right?

Yes. So, for Viking, it was $5 million of amortization in the first quarter and [total amortization] cost increased $5.6 million as there is some other acquisitions also, which added to that number.

Right. So, a total of almost $12 million, which sounds like more than a $0.30 impact, but my question is does that 12% EBITDA margin include those charges or exclude those charges?

I'm sorry, Tony, could you repeat the question? I just -- the largest comment that the -- when I calculate the dilutive impact to the first quarter, I'm not including all the amortization, because some of that's ongoing. So the non-recurring charges are -- that's a dilutive impact, but the amortization is ongoing.

Well, how much --

I'm sorry, if you could repeat the question, that would be --

Sure, I will, but how much of that amortization is ongoing? All of it or just a portion?

So, it will ramp down as the year goes on. So, it starts at $5 million a quarter, but that'll probably decrease by $1 million or $2 million in future quarters.

Okay.

We're finalizing our -- we're still finalizing our allocation of intangibles, which will be completed in the second quarter.

Then, the question, Tim, was does the 12% EBITDA margin for Viking include or exclude the integration or amortization charges?

Okay, yes. So, that excludes the one-time charges. So, that's kind of an ongoing run rate, excluding the one-timers.

Okay. That was it. Thank you very much.

Peter Lisnic, Baird.

Good morning, gentlemen.

Hi.

Tim, I guess the -- or Selim, the move-up of the Viking 20% EBITDA margin by, I guess, what a year or so, 20% by 2014, now can you give us a sense as to what you saw, what gives you the conviction that you can pull those margins in that 20% level, basically you're sooner than what you previously were expecting?

Well, I'm going to relate that Peter in -- I'm going to break it out in three things. One, simple one is cost reductions. As we benchmark against literally not only about Middleby's way of doing business, that's why as we benchmark against Viking's competitor, we seem to be a lot heavier loaded in terms of both overhead and people, as you compare us versus Viking competitors.

So we tend to see, one, we've started embarking on some cost enhancement. We also have started looking at our distribution channel from a cost in our distribution channel, which was higher by -- much higher than our competitors, dollar to dollar in terms of spending on our distribution, as we look at Viking in existing, not looking at Middleby's distribution, but Viking versus (inaudible) and others.

Number two, as we continue looking at pricing and innovation, now that's number two, we see significant margin in our new product, as we have shown some of those new features. Some of them coming from Middleby, some of them have been organically developed at Viking, and they're our leadership in guidance.

We see significant interest by our dealers and distributors on willing to pay for those features that are coming through, similar to what we've done at Middleby. If you remember, several years ago, we said, as we continue innovating, our customers are willing to buy from Middleby, given the innovation that we talked about. So there're a lot of innovative product coming through at Viking that's going to be launched [so this] second half of the year and we'll now start to see those sales and margin improvement coming through.

Number three, that has been some personal saving, as we consolidated firstly, leverage the Middleby organization with Viking, they have benefit from the savings that we generate from our suppliers, in our site, in our scale.

Okay, perfect. That is very helpful. And then second question, just on the organic growth in Commercial Foodservice, [8.5%] or so looked quite strong given the macro backdrop. How should we think about I guess the major chain remodeling initiatives that you're working on in your new product development efforts? How should we think about those factors impacting that growth rate as we look to the rest of the year, given the macro backdrop and then maybe more importantly how is that set up for more the intermediate term '14, '15, et cetera?

Well, I'm going to answer the question, Peter, in two ways. One, we came out from a -- our customers came up from a very difficult quarter in the first quarter. First quarter is very difficult because they were impacted by a very brutal winter and some economic pressures on the consumers. And I think, as we start seeing the second quarter come on, we started seeing consumer confidence getting healthier based on the results of the April surveys. And it seems the impact of the payroll tax appears to be waning.

So from a macroeconomic factor, I think, our customers are starting to see less pressure on them, when the weather is behind us. And I think the consumer confidence and spending is getting better. So from that perspective, we're seeing -- we are very optimistic along our operators and our customers as they're going to have a better second, third and fourth quarter.

Now in terms of Middleby, specifically, micro Middleby, we are basically finishing up a major rollout with Chili's, so that rollout, most of it, you're seeing the impact of it in the first quarter, so we're going to have a lag until we get to fill up that order, because it's [lost] order for Middleby. So on the Foodservice side, you're going to see a lag in the second quarter, because we're almost done with Chili's. So we're doing the final few stores. So the Chili's rollout is done and it was multimillion dollar rollout. So we're going to have a lag between the end of the first quarter where we still have the Chili's impact and some time between the third and fourth quarter as we fill up another capital who will replace Chili's as we fill up that rollout. So there's going to be a lag in terms of topline, in terms of that fill out.

Now, let's go back and look at what's happening in our products. We have a lot of new product innovation. We have a lot of testing of products. So in the third and fourth quarter, we have several rollout that will start compensating for the soft -- whatever, the lag between the first and the third quarter that will occur in the second quarter.

Okay. That is very helpful, thank you for your time.

Thank you.

Thanks, Pete.

Jamie Clement, Sidoti & Co.

Hi, Selim and Tim, thanks so much for taking my call as always.

Thank you, Jamie.

All right. Selim, two questions for you. First is, I was wondering if you could give us a sense of a relative strength in your Commercial Foodservice division among the various segments of restaurants that you serve, whether it's quick-serve pizza, casual, fast casual, et cetera, et cetera, if you can just give us some sense of what the market dynamics are in your opinion.

Well, it's a great question, Jamie. Thank you for asking this question, because this is very critical to what I see the foodservice business going. First, I can tell you that across all segments, all segments, I'm talking casual dining, fast casual, pizza, quick-serve, they are all voicing great optimism across all the segment about the second half of 2013.

I have personally called and spoken to many of our customers. I have spent the last six months basically either visiting or talking to our customers and they all are reporting significant optimism in the second half of 2013 and they are starting to report that business has begun to improve very strongly in April. So, from that perspective, our customers have basically come back in April to seeing a much better improvement and they are feeling very optimistic for 2013.

Some interesting -- one interesting indicator that is fascinating for me as I watch all those numbers in this data compiled, for the first time in 22 months, casual dining restaurants outperformed quick-serve in March. If you look -- whilst casual dining had been really hit hard, for the first time in 22 months, they have outperformed the average performance of casual dining, outperformed the fast-food industry in March for the first time.

And I wanted to ask -- and Selim, I wanted to ask you about that point, because I saw the same thing. Do you think that that's a function of the economy or do you think that's a function of some major casual dining chains getting their menu and their service and their concepts more to what customers actually want? Because I mean, I think there's a debate there, I think a lot of people say, okay, well, maybe the economy is healthier, so people are going for higher-check restaurants. On the other hand, you could make the argument that some of those companies that are starting to perform better, performing better, because they've changed their concepts, they have updated their menus, they've done all of those things. So, I was curious for your thoughts there.

I think it's a combination of all that, but I could tell you, the word I am hearing from most casual dining operators, tactical value, they've never talked about tactical value. Before, those people were saying, okay, I'm going -- I have a burger, it doesn't matter if people are going to wait, I have a good burger, I have a decent burger, it doesn't matter if people are going to 22 minutes to get the burger.

Today, they are finally getting the concept and this is what happened with our relation with Chili's, and I will elaborate on this in just a minute, is that, finally, those casual dining chains are focusing on improving menu quality, speed of cooking and value. And I think part of doing this is the following, it's saying, okay, let's go back and look at what happened. And we have, right now, over seven chains, seven chains, casual dining chains, looking at a similar process as Chili's. So I'm going to give you literally today, a Chili's rundown of what happened after they implemented the Kitchen of the Future and changed their menu and sped their cooking and retrained their people.

Chili's guest satisfaction scores are up in the first quarter of 2013 by over 10% across the whole chain. It's not one store. Across this chain, they improved their guest satisfaction score by 10%. Their operating income margin in EPS increased and the Chili's traffic exceeded the average casual dining industry traffic by more than 2% in the most recent quarter.

So, as you look at their basically improvement, you have menu improvement, kitchen equipment innovation, investment in technology and you look at what happened. So, finally, those operators are trying to do the same. So today, I have seven chains testing a similar process, casual dining chains, and ultimately, we will land several of those, because they want the same thing. Apparently, the life went on and said, "Okay, we can't compete. We are compressed between fast casual and quick-serve and we're losing the customers." So this is what's happening.

So let me summarize everything what's happening. Very difficult start of the year for our customers, because of [weather], because of economic pressure on payroll tax. Today, [April], it will change. Very strong optimism across all the segments for the rest of the year and we're starting to see April come through a lot better, including for our April.

And changing gears, and this will be my last question, when are your customers and when will Middleby have more of a presence in Latin and South America?

I think we are -- I think that is a good change, but I think, in Latin America, we've had a very strong -- we're a dominant player in Latin America. I think what was missing was Brazil. And I think, with us opening up a factory in Brazil and doing our sales and service, we see Brazil to become a major player for us as we finish, literally, we finish the factory and the hiring of the people and the opening of our office, somewhat in the [first] quarter of 2012. We're going to start seeing Brazil becoming another great segment. So Mexico, Latin America has been very, very strong. I think Brazil would come on very strong in the next, I would say, in the second half of this year we'll start to see some impact.

Well, Jamie, just to clarify, it's the sales and distribution office that we opened, but that was our fastest growing market in the first quarter internationally.

And Tim and Selim, I was really talking more from a three to five-year point of view. And, obviously, you don't just -- it's not the Field of Dreams, Kevin Costner movie, where if you build it, they will come. Your customers obviously have to pull you there and it just -- it seems to me like that is an enormous -- if you talk about Argentina, Brazil, Colombia, Mexico, I mean, it's just a potentially enormous opportunity for some of your customers?

Well and we are building a broad base of customers there in Latin America already, not only the U.S. chains that are going there, but the local chains, So we've got a pretty broad list.

Okay. Thank you so much, Tim and Selim, for your time.

Okay, thanks.

Schon Williams, BB&T Capital Markets.

Hi, good morning. This is Aaron Reeves sitting in for Schon today. Congratulations on the quarter. I just wanted to ask about your acquisition pipeline. I know, obviously, you're still working on the Viking integration and there wasn't a lot of activity in the quarter, but should we expect to see that pace of M&A trail off over the next couple of quarters or are there some things that you're working on that we can expect to see over the next couple quarters?

Yes, I'm sorry, I'll make a (inaudible), I think, the moderator, we can hear you speaking on the call, so I just -- if you can make sure it's muted. But the acquisition pipeline, it remains strong and consistent with the last couple years. So we've obviously done a number of acquisitions the last two or three years and really we see that pipeline is very consistent from quarter-to-quarter. The timing is just really a function of the opportunities, but we feel good about the pipeline in all the segments we're in, both Commercial Foodprocessing, as well as now we're developing a pipeline in the residential side as well.

All right. And then -- and my second question, really just goes back to SG&A. I think we were maybe expecting to see a little bit more leverage in this quarter. I was just curious to know why should we expect for SG&A, maybe for the next quarter, and maybe in the back half of the year, should we begin to see that a little bit lower as a percentage of sales maybe than versus a year ago? Just wanted to know your thoughts on SG&A.

Well, the incremental SG&A was largely driven by the acquisitions and that kind of laid out the additive impact of that, which I think we'll see going forward. I mean, we did see actually some leverage in the selling expense, excluding the impact of Viking, as well as G&A, if you kind of back out the acquisition impact. So we're seeing some leverage in that as we get the organic growth of the business.

All right, thanks. I'll hop back in the queue.

Okay. Thanks.

Jason Rodgers, Great Lakes Review.

Hi, guys.

Hi, Jason.

Hi, Jason.

Looking at Europe, and Selim, as you speak to your customers, I'm just wondering if you're seeing any signs of early recovery there?

I would say, Europe continues to be very difficult. I think it will continue to be a very difficult year. This year, we're seeing it's not getting worse than what it was a year ago. So, if you're wrapping around year-to-year numbers, it's going to remain the same. Remember, last year, we've seen a drop in Europe by almost 15% to 20%. I think, now, that is a new level of where Europe is going to be. So, we're not going to see worsening situation from where we've been, but we're not seeing a little bit of uptick. So I think Europe continues to be most probably difficult through the fourth quarter.

I am starting to see something interesting happening in Europe that I have not seen specifically in places like UK, Germany and Scandinavian countries, where they are starting to look for, what I call, again, when I just spoke about the casual dining chain, they are looking what I call tactical value, trying to figure out how do we upgrade the menu, how do we do restaurant remodel and how do we create value to our customers. It took us some time to do what we've done here, but I think we're starting to see a lot of menu changes. We're starting to see labor saying, "Hey, help me reduce my labor costs." So, especially, when we look at convenience store and supermarket where we're very strong with those customers in the UK. So in the fourth quarter, we're going to start to see, for us, for Middleby, some rollout that are going to occur in the UK and Germany with those two type of customer, convenience stores and supermarkets.

Okay. And then looking at your new products you're talking about in the second half of the year, are there any products that you would consider game-changing products or is it mainly just improvements from existing products?

Let me go through the list, because, I think, as I look at the list of products we have, we introduced in 2012, we introduced 12 new products. In 2013, we're introducing 13 new products. So let's discuss those products. So, one, I'm not going to go through basically 25 products, but I'm going to talk to the major ones. So, we continue to see Kitchen of the Future innovation as we continue improving it, adapting it from all what you've learnt from the rollout with Chili's. So that's continuing to have -- we will most probably have another big impact in the Kitchen of the Future in 2014.

Then you look at the waterless steamer, which is a very disruptive product, steaming without water basically. And that product is going to roll out in -- starting in the third and fourth quarter. So, basically, we've got acceptance of a major chain. So we'll see a rollout of this technology rolling out in the third and fourth quarter and it's a multi-million dollar initiative.

Then I look at our induction cooking and we are in the process of rolling out our induction steam table with a large Asian chain, and it's rolling out as we speak. We are also seeing some of our innovation in terms of the toasters and waffle bakers and all of those coming soon. So the breakfast restaurants, I'm talking about those being Tim Hortons, Starbucks, Dunkin' Donuts and I can keep on, I've a long list, we're seeing significant investment in cooking equipment at those places and that's ongoing.

So let me summarize where we are. We are basically, right now, in the technology we have, we have a lot of offering in breakfast. And that we're seeing that equipment being bought and purchased from us as we speak. Induction cooking, we're seeing that continues to grow. Waterless steamer, third and fourth quarter, we'll see the rollout, a multimillion dollar rollout with one large chain, has been signed and the orders has been received. So we're now fulfilling. We'll fulfill that order. And the Kitchen of the Future, I think, we'll see that another large customer is coming in, starting in the first quarter of 2014. So that gives you a timeline of where our innovation is taking place.

That's very helpful. And then finally, Tim, was there any impact on sales with foreign currency and were there any shares repurchased in the quarter?

There was a small amount of shares repurchased in the quarter that totaled roughly $1 million. The impact of currency was minimal on the sales.

(Operator Instructions) Gary Farber, CL King.

Yeah, thanks. I was wondering if you could just give, in the quarter, what the breakdown as a percentage of revenue was between Europe and what you characterize as emerging economies?

Gary, while Tim is looking at that, let me give some things that I talked about. If we look at emerging economies in the past, we were roughly around 5% of our sales and I'll say, by 2014, it will be around 10% of our sales. We're growing our emerging market significantly and we see this happen pretty fast.

Tim will give you the breakdown between Europe and emerging, but our emerging market continues to grow extremely well. So that gives you a little bit of flare more than just a snapshot of one quarter. We're working with companies like Starbucks as they go -- Starbucks is planning to open hundreds of stores in India and we are the major supplier of cooking equipment with Starbucks. So we see that coming very, very strong for us.

I think we continue to remain very close with several chains in China. And we got a little bit of an impact of avian flu that occurred in China in March, and in fact, a little bit in April. But other than that, we see Yum! and other chains, Jollibees and all of that in Asia growing pretty fast and we remain a strong supplier to those chains.

In Europe, I want to reemphasize what I talked about Europe. So our penetration of convenience stores and the market would be that starting to have impact, we were testing some very strong technologies in UK and Germany with several of those chains and we'll see some growth in Europe in the fourth quarter. So I'm going to turn it over to Tim to address specifically your question.

Yes. So, Gary, our total international sales were about 26% in the quarter. And last year's first quarter is about 31%. So it's come down a little bit and that's all as a result of the Viking acquisition as they've got less of international sales. But that 26% breaks down with about 12% to 13% being Europe and then Asia and Latin America being 6% to 7% each.

Right. Okay. And then just one other one. In the last three quarters, your organic, sort of consolidate organic growth has picked up a fair amount, sort of the high single-digits, 10% plus in this quarter. I was just wondering, it sounds like maybe this is a little bit of a slowdown in the short term, but it sounds like you have a lot of momentum heading out of the year. Would you think that heading into next year that you're likely, just as a big picture, likely to sort of pace towards the higher end of where you've been organically over the last five quarters?

I would say, in 2014, yes, we should see acceleration for two reasons. One, we see the fact we're going to replace the Chili's order with another customer. So in 2014, we'll have a replacement of the Chili's rollout with another customer that will replace Chili's. The second thing is as we continue basically testing with breakfast concept, all the innovation we have, I'm also looking at the food processing business. We have -- we're working with several customers right now to implement some bakery -- to remodel some bakery factories and some food processing factories. So I look at organic to accelerate in 2014.

Great. Okay, thanks.

Thank you.

That is all the questions we have today. I'd like to turn the call back to management for closing remarks.

Well, I first want to thank all of you for attending our earnings call. Again, after a very difficult start to the 2013 year due to the particularly brutal winter and economic pressures on consumers, we have seen same-store sales and traffic trends beginning to rebound as we enter the second quarter.

As I've spoken and visited many of our customers, they all voiced optimism across all segment about the second half of 2013 and reported that business have begun to improve in April. As I mentioned during one of the question asked to me, casual dining restaurants, for the first time, in 22 months, outperformed quick service in March, a great sign for our Kitchen of the Future implementation.

According to the National Restaurant Association survey, US consumer looks healthier based on the result of their April survey and the impact of the payroll tax appears to be waning. We are, to date, testing many of our innovations on as many chains, focusing on improving menu quality, speed of cooking and tactical value. As we move into the second half of the year, we'll see restaurant grow, their sales compared to first quarter where the weather affected many parts of the US. Our second quarter sales will be affected in China by the impact of the avian flu on our customers like Yum! and others operating in China, and I think that will be behind us very quickly. So we continue to see a shift towards healthier food option in emerging markets, focused on labor savings and store sales growth trends that will continue through menu changes.

We expect 2013 to be the third straight year of sales growth for restaurants, in terms of food service sales and same-store sales. So as we look at 2009, and we recovered, this will be straight three years for the restaurant industry. We see breakfast places to continue to invest heavily into a cooking equipment and we continue to see the emphasis on energy and water saving across all our customer base to continue. To prove it will continue, we just signed up our first customer on our waterless steamer and we signed out our first customer on our waterless steam table.

So as we continue looking at Viking and the Viking integration, we continue to change the channel of distribution there. We continue to consolidate our cost and reduce overhead, and we continue investing in new product innovation. We see the housing market to continue to recover and we don't see a stop to this. The inventory of housing supply has shrunk and housing prices continue to rise across most metropolitan area. We see also our dealers to continue basically depleting their inventories and we'll start seeing in the third and fourth quarter, specifically in the fourth quarter, significant rebound in our order rate in Viking.

This will conclude all my comments. I would like to only invite people to two things. The National Restaurant Show is taking place in Chicago on May 18 to 21 and we'll be exhibiting there and we invite everybody to attend. And we are hosting an Investor Day on June 18 in Dallas, Texas, at our TurboChef division, and we will be exhibiting and showing most of our new products and some new Viking innovation that will be shown on June 18 at Investor Day that we are hosting in Dallas, Texas. You are all invited to this. Thank you.

Okay. Thanks, everybody. We appreciate you attending today's conference call. And we look forward to speaking with you next quarter.

Ladies and gentlemen, this concludes today's conference call. We thank you for participating. You may now disconnect.