The Middleby Corporation (MIDD) Q2 2021 Earnings Call Transcript

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The Middleby Corporation (MIDD 1.13%)
Q2 2021 Earnings Call
Aug 12, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and thank you for joining us for The Middleby Second Quarter Conference Call. With us today from management are Tim FitzGerald, Chief Executive Officer; Bryan Mittelman, Chief Financial Officer; Steve Spittle, Chief Commercial Officer; and James Pool, Chief Technology and Operations Officer. We will begin today with opening comments from management, then open up the call for questions. Directions on how to get in the queue will be given at that time.

Now, I'd like to turn the call over to Mr. FitzGerald for opening comments. Please go ahead, sir.

Timothy FitzGerald -- Chief Executive Officer

Good morning. Thank you for joining us today on our second quarter earnings call. As we begin, please note there are slides to accompany this call on the Investor page of our website. I will start the call this morning with comments on our decision not to counter and further increase our offer on Welbilt. We continue to stand by our view that the originally accepted offer to acquire Welbilt through a merger transaction offers superior value to Welbilt shareholders by participating in the ongoing growth of Middleby, along with sharing in the benefits of the combined organization. While on prior calls, we shared our enthusiasm for the transaction. We are even more enthusiastic about the many opportunities we have at Middleby and the growing momentum of our business. As we contemplated the decision of the Welbilt Board to accept an all-cash offer, we are unwilling to further increase the consideration of our offer at the expense to our Middleby shareholders, particularly in light of the excitement around our stand-alone business prospects.

We remain in an extremely strong financial position that will allow us to make investments to support our strategic sales and profitability initiatives and execute on our long-standing track record of smart, strategic and shareholder value-enhancing M&A. Although Welbilt transaction would have been sizable, we have a considerable pipeline of other strategic acquisition opportunities, consistent with our history over the past 20 years. These opportunities will provide a higher return to our shareholders as we continue to successfully build our business for the long term.

Now, as it relates to the quarter, we continue to build upon the positive momentum across all three of our segments: investing in technology and product innovations addressing market trends, further -- furthering our strategic sales initiatives and adding to our brand portfolio with strategic acquisitions. We remain focused on evolving our business to meet increasing customer expectations and rapidly changing industry dynamics. While we execute our strategic initiatives, we also continue to make progress against our financial goals. We posted improvements in EBITDA margins at each of our three business segments, all in excess of 20% and all exceeding pre-COVID levels of 2019.

While we face near-term pressures with massive supply chain disruption and material cost increases, we remain committed to our long-term profitability targets as we drive profit improvement through acquisition integration initiatives, manufacturing and supply chain activities, and improvement in the mix of product sales as we promote higher technology solutions. As we move into the second half of 2021, we continue with our optimism around market demand and the strength of our positioning in each business segment.

For our Commercial Foodservice business, the restaurant industry remains disrupted, but continues to improve. And our customers are making strategic investments in their foodservice operations, leading to greater acceptance of new technologies to address rapidly changing consumer trends and the increased operating challenges, most importantly, the availability of labor.

At our Residential business, new home starts continue to be robust, while strong existing home sales and increased time spent at home is supporting kitchen remodels. These conditions supported continued favorable backdrop to our business for the year and carrying into 2022. We're excited to have debuted our newest Residential showroom located in Dallas, Texas. The showroom is tied to our Middleby Innovation Kitchens and demonstrates the crossover of product innovation at our commercial and residential businesses, bringing to life our differentiated ability to offer professional restaurant innovations in the home.

We're also pleased to have recently announced the latest addition to our Residential brand family with the acquisition of Novy. Novy brings the premium line of built-in cooking and ventilation featuring performance with a modern European design. Novy is a terrific complement to our existing brands and product offerings. We're excited to welcome the Novy team, and we see significant growth opportunities in the year ahead.

At our Food Processing Group, the impact of COVID and travel restrictions will continue to be a challenge to installations and timing of large projects. However, demand continues to increase for our complete solutions, offering innovation to address operating challenges, including labor, safety, rising food costs and sustainability. And we are positioned to address these demands with solutions featuring our new product introductions and acquisitions we've completed over the past several years.

Now, I'll pass the call over to James and touch on some of the innovation initiatives and most recent product launches highlighted in our Investor slides.

James K. Pool -- Chief Technology and Operations Officer

Thanks, Tim. We have a lot of terrific innovations happening in each of our divisions day-to-day. They continue working on the next-generation combi, convection ovens, rapid cook ovens, fryer, espresso machine, processing line and the list goes on and on, just like the song. These brand level of innovations will always be a part of our engineering DNA. Beyond this, we are also focused on six initiatives across our divisions to bring much needed labor savings, enhanced efficiency, such as speed of service and profitability to our customers. They are automation, beverage expansion automation, common controls, IoT, health and safety, and ventless.

In today's earning presentation, I've highlighted three new innovations within Middleby to ensure a strong demand pipeline. The first innovation, the TurboChef by Alkar is an excellent example of brand level collaboration and innovation. This first-of-its-kind thermal processing oven offers our customers a 45% to 90% reduction in processing times across a wide variety of food types by utilizing five unique heating technologies. In addition, the Alkar oven also enhances yields by 2.5% to 5%, which might not seem significant until you consider the tonnage of product that the machine will process over its lifetime.

The next innovation is a textbook example of the power of embedded in collaborative automation. The PizzaBot is the first system designed to prepare and process any size or type of pizza to exacting standards ensuring perfect consistency, while substantially minimizing food waste. From the PizzaBot, our collaborative robot takes over and moves the product to an oven for the perfect rapid bake. We are very excited to bring the PizzaBot to market, and while it would have made its debut at the NAFEM Show, it will be in use and on display at the Middleby Innovation Kitchen and in our customer locations.

Finally, I want to introduce our new VentCore product by EVO. This is an exciting innovation in our ever-expanding lineup of ventless products. VentCore product was designed to turn some of our most aggressive high temperature cooking systems into ventless systems. The EVO VentCore uses new patent pending technologies to minimize the reliance on consumables and accessories, while improving the cleanability and maintenance of the ventilation system. The VentCore was designed to bring all types of cooking to all types of venues. These are just three of the many great innovations we are bringing to the market. I look forward to discussing more in the future.

And now to Bryan.

Bryan Mittelman -- Chief Financial Officer

Thanks, James. For the second quarter, revenue of $809 million and adjusted EBITDA of $186.2 million were just a bit ahead of what we had indicated early last month. GAAP earnings per share were $2.13 and included a $19 million or $0.33 benefit from tax legislation impacts, primarily in the UK. Adjusted EPS, which excludes the tax items, amortization expense and non-operating pension income, as well as other items noted in the reconciliation at the back of our press release, was $2.11. Operationally, we continue to build upon our strong foundation and have delivered another solid quarter.

Looking at total company performance, revenue continues to trend very positively with growth sequentially of over $50 million from Q1. On a year-over-year basis, revenues grew 71% or 65% organically with strength in all three segments. Order trends also continue to be robust. We exceeded $1 billion in orders during Q2, and our backlog is at a similar amount. Our 23% adjusted EBITDA for Q2 was a substantial increase over Q1 as well as Q2 of 2020. We sequentially expanded margins meaningfully in each segment. By the way, all margin values I will discuss are on an organic basis as well, meaning, excluding any acquisitions, disposition and FX impacts.

Total company adjusted EBITDA of just over $186 million represents approximately 15% sequential growth from Q1 and a 150% growth over the prior year. We continue to grow our bottom line faster than our top line. When comparing Q2 to the prior year, we grew EBITDA over twice as much as revenues even while we are investing over $5 million in technology initiatives quarterly. As a result, our strong cash flow generation persists. Operating cash flows of nearly $113 million was a record for us for a second quarter. Our profitability expansion and increasing cash flows are the benefits from the actions we took to improve our business as the pandemic hit and the ongoing focus on integrating acquisitions and managing through the challenges we continue to face, while delivering innovative solutions to our customers.

Looking at our segments. Commercial Foodservice revenues globally were up 80% organically, and when looking just at North America, the increase was approximately 77%. The international increase was 89%. Our margins continue to expand sequentially. We produced nearly 26% adjusted EBITDA for Q2. In Residential, we saw revenue up 63%. Very high levels of demand persists for our premium appliances in outdoor cooking platforms. Here too, our margins continue to expand sequentially. We grew to well over 22% for Q2. In Food Processing, revenues increased 25% and the adjusted EBITDA margin was over 23%.

Another highlight was our operating cash flows of nearly $113 million. Discipline around cash flow is core to running the business for us. We continue to demonstrate our ability to manage costs and cash, while investing, driving innovation and providing excellent service to our customers. Our total leverage ratio is down to 2.3 times, while our covenant limit is 5.5 times. We also have over $2.1 billion of current borrowing capacity.

We will continue to execute our M&A strategy, as well as investing to improve our operations and in turn, increase profitability. An incredibly important investment we have made is the MIK, the Middleby Innovation Kitchen as well as the adjoining and stunning residential showroom in Dallas. Along with having awesome facilities, we have an outrageously talented culinary team. I've been with them on a few occasions recently, and I'm willing to admit to getting spoiled by them. Being at the MIK, which by the way is the largest IoT connected kitchen in the world, is really awe-inspiring event. Looking at our list of brands on paper is impressive, seeing them physically together is amazing and enjoying the output is even better. We are proud of the breadth of what we offer. While -- although our brands are great, I felt it was imperative to somehow come up with a Top 3 list to commemorate my days feasting at the MIK. And since I won't be able to offer tours at NAFEM this year, this can serve as a quick Middleby tour to get you all hungry as the lunch hour approaches.

One brand that does not get as much recognition in Middleby family is sometimes Globe. Their preparation solutions brought to life what may have been my favorite dish. The masterfully created watermelon gazpacho hit the spot, especially given the Dallas heat. It was incredibly flavorful, a little spicy, a hint of sweet, cool and refreshing, or crazy good as our CCO aptly described it. Moving on to the culinary course, our talented chefs will occasionally admit to a bit of a bias for hard fuel-powered cooking. Coming out of the Spain, the Josper charcoal grills are always a favorite of cooks and diners alike. A Tomahawk dry aged for 90 days in our TenderChef was absolutely delicious.

And lastly, moving onto the sandwich food group, what the Plexor can do will be market changing. And with our Middleby controls, it is so easy to use that even I could operate it. The Grilled Reuben was toasted perfectly, a crispy outside with a warm savory inside. I could go on and on about the menu breadth that the Plexor can deliver. And I'll have to come back to the cookies another time as I probably should put aside my side hustle as Chief Food Officer and get back to my typical CFO duties.

So having covered Q2 and my culinary ramblings, it is time to look forward to the rest of 2021. We've provided order and backlog data in the presentation that is available at the Investors section of our website. We also provided a full-year outlook in a release last month, which I want to further address. As I've noted before, even with a solid start to the year, we're keeping our expectations at modest levels for the near term. The reason for some caution in my tone, even with the order trends, is due to the variety of supply chain issues and cost pressures we are facing.

Many positive factors do contribute to optimistic views, such as our backlog, the innovative solutions that are addressing customer challenges, and the development activity by many of our customers. However, I don't want anyone to fail to recognize the near-term risks that are impacting our cost structure and availability of raw materials and other inputs for our products. These forces do limit our ability to generate higher top line growth for the next few quarters and will play some downward pressure on margins. We are taking pricing actions to mitigate margin impacts, but we don't expect meaningful contribution from those until early '22 given our backlog levels. I will note that we are currently anticipating low-single-digit growth in overall revenue sequentially from Q2 to Q3 with margins compressing.

Also, we call that Food Processing is a lumpy business. As we look at how contracts will be fulfilled, we will likely see a temporary revenue decline for this segment when comparing Q3 to Q2. However, order strength has continued, thus Q4 should show solid growth for FPG. As we look out to Q4, we expect total company revenues could grow at least mid-single-digits from Q3, which includes the seasonal benefits typically seen in Residential at the end of the year. Given the volatility impacting the supply side of our business, it would be prudent to anticipate Q4 margins not exceeding Q2 levels.

In closing, to highlight what the full-year 2021 should deliver, Food Processing and Residential should see revenue growth in excess of 20% over 2019 levels with margins having expanded as well. Commercial Foodservice organically will be at similar levels to 2019 in terms of revenue and margins. It's important to remember that the margins, while likely at similar to '19 levels, are after considering the inflationary impacts we are facing and the investments we have been making. This demonstrates that our management actions to address costs, integrate acquired businesses and generally improve operations are generating results. In total, consolidated company margin for 2021 should exceed 2019 levels as well.

While it is a little too early to specifically be addressing 2022 and beyond, I will reiterate our commitment to the medium-term margin targets we have set for each of the segments, which are 30% for commercial and initially 25% for the other two segments. While the near term may be a little rocky, I believe we are extremely well positioned for the longer term and that our products and solutions as well as the teams and tools we have driving our success in the market every day will continue to deliver industry-leading results.

And with that, Tina, let's please open the call to questions. Thank you very much.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from Tim Thein with Citigroup.

Timothy Thein -- Citibank -- Analyst

Good morning. Thank you. Just Bryan, maybe coming back on the comments there on pricing and when those increases take effect, is it -- if so -- is it fair to assume that what's the opportunity or the ability to price, what's in the backlog is limited at this point, meaning, what's -- you have a PO, but the order is not shipping for six months or longer. There's limited flexibility or ability you have to reprice anything in the backlog. Is that a fair takeaway from what you said?

Timothy FitzGerald -- Chief Executive Officer

Yeah. This is Tim. So, that is fair. We're not generally repricing the backlog. The orders are in, and frankly, we just don't want to disrupt our customers. We're very focused on the long term in getting -- being proactive about where pricing should be as we go into next year.

Timothy Thein -- Citibank -- Analyst

Got it. Okay. And then, maybe -- I don't know, Tim or Steve, maybe you could just say a little bit more in terms of what you've seen thus far and what you are seeing just from a customer perspective. I suspect that as you think about overall revenues and getting back to or above that '19 level. I would assume that some of the larger chains have been doing a lot of the heavy lifting. But -- and you also have, as you said in the release, a lot of customers that are obviously still struggling from shutdowns and the like. So is there a way to kind of, I don't know if you, how much of it you have on your fingertips, but kind of help us in terms of customer segments that are considerably -- that are still kind of early days of recovery and what that represents from an overall book? And this would be for the Commercial business obviously. So maybe just a little bit more color in terms of the kind of the leaders and laggards. Thank you.

Steve Spittle -- Chief Commercial Officer

Yeah. Good morning, Tim. This is Steve. So I would break it into maybe three groups to help simplify how we're thinking about. So I think kind of group one would be, you have segments that hung in there pretty well last year and continued to do well. So certainly you have QSR, pizza, retail, C-stores. I mean, I think again specific to QSRs, I mean, they're back to obviously doing new builds at pretty aggressive levels. I think that certainly continues into next year. So that's kind of, I would say, bucket number one that has continued to well outperform 2019 and prior levels.

So -- and I think you have kind of group number two, which I would call, maybe some of the other segments that have been a little tougher hit, whether it's casual dining or really just the general market. So I think you're seeing some of that certainly come back. I think we're seeing that more in replacement business, right. It's not as much in the new builds, but the replacement business that I do think has started to come back. So that's kind of group two.

And then, group three, I would say, are the hardest hit segments, right. So we're talking about institutional or we're talking about travel/leisure any independent restaurants. So I will share some color just specific to schools. I think it is an interesting one. We've talked about schools before and kind of the order cadence that you normally see. So school business for us from an order standpoint is actually running pretty well ahead of 2019 levels, which I think is very encouraging for two reasons. I think they're back to the normal ordering habits, getting ready for kids to come back in the fall. And I think you're seeing catch-up from obviously not doing any kind of purchasing last year when kids were remote. So those are kind of, I would say, the three segments. I think they're all trending positively. Group three is still well behind kind of groups one and two. So hopefully, that helps, kind of, frame up the perspective for the back half of the year and certainly into next year.

Timothy Thein -- Citibank -- Analyst

Yeah, it does. Thank you. And I mean, just not to the third decimal place, but as you think about that group three, I mean, what are we thinking like a quarter, kind of 30%-ish ballpark in terms of what those categories would represent.

Steve Spittle -- Chief Commercial Officer

I mean, again, I think if you go back, we've kind of shared that chart in -- the pie chart in prior slides or investor decks. And I would say it's in the -- yeah, it's probably in the 25%-ish neighborhood, I would say historical levels going back to kind of '19 levels. That's probably a rough estimate of what those three, four, five segments would represent, Tim.

Timothy Thein -- Citibank -- Analyst

Got it. Thanks for the time. Take care.

Steve Spittle -- Chief Commercial Officer

Thanks.

Operator

And your next question is from Larry De Maria with William Blair.

Lawrence T. De Maria -- William Blair & Company -- Analyst

Thanks. Good morning, everybody.

Timothy FitzGerald -- Chief Executive Officer

Good morning, Larry.

Lawrence T. De Maria -- William Blair & Company -- Analyst

Hey, guys. Hey, Tim. So obviously, you haven't walked away from Welbilt until now. I understand your sentiments, but curious your big picture thoughts now on M&A consolidation in the industry. Are there other large deals that are likely to play out do you think? And this is a potentially settle of another wave or maybe larger cross-border deals that with dribbling [Phonetic] for last few years that are now hitting or is this -- do you view this as one-off in the industry and it's back to small and medium-sized deals in general?

Timothy FitzGerald -- Chief Executive Officer

Yeah. So Larry, I -- generally, we don't comment on deals. Obviously, Welbilt was very, very public. Typically, we don't comment on deals so until after we announce them. I'm not -- and we've been at this for a long time over 20 years, and we see a lot of transactions happened. The world has become more global, right. So even with Middleby, you've seen more international acquisitions over a period of time. We've expanded our platform, which we will continue as well. So, I mean -- I'm probably not going to get into a thesis of what may happen in M&A overall. I would just say that we are the best positioned in the industry given not only our balance sheet, but our core competencies, and I guess our strategic approach to acquisitions. And as I mentioned in the opening comments, I mean, we always have a strong pipeline of ideas focused on brands and building out our competencies whether that's innovation, route to market, international. So, I mean, we feel very good about our pipeline, but I'll probably leave it there, that...

Lawrence T. De Maria -- William Blair & Company -- Analyst

All right.

Timothy FitzGerald -- Chief Executive Officer

Yeah.

Lawrence T. De Maria -- William Blair & Company -- Analyst

And then secondly, I think when you gave your guidance in July, you expect this 2Q backlog to be over $1 billion, came in under $1 billion, and processing orders came in below. You said you are going to come in. So, is that the delta? Is that processing orders came in a little bit lighter than expected and may be accelerated post quarter or just timing, or just give some color why there's different numbers from July now?

Timothy FitzGerald -- Chief Executive Officer

Yeah, you are right. The Food Processing can be a lumpy business. And as we closed the quarter, one thing flipped in on the other side, right and that business also has sizable orders. So it ended up with the rounding being just short of $1 billion as well. So if you would have looked at July numbers, they would have been up pretty robustly. So really, it's just a timing thing and one order. And I would also note that residential orders also as we closed the quarter came in stronger than we had initially estimated. So put it all together, it was as expected, or actually, if I take it with the residential coming in a little bit ahead, probably just slightly better or a little better than we had initially estimated, so really just a timing thing.

Lawrence T. De Maria -- William Blair & Company -- Analyst

Okay. Thank you.

Timothy FitzGerald -- Chief Executive Officer

You bet.

Operator

Our next question is from Mirc Dobre with Baird.

Mircea Dobre -- Baird & Co. -- Analyst

Thank you, and good morning, everyone. I guess, what I'm wondering is if you can give us maybe a little more color on how demand has trended into Q3? What you have seen in July? And I'm asking this because this is a question that we often get from investors, whether or not there is really any impact from the Delta variant either on activity or sentiment, or how customers are thinking about investment in the back half. So can you provide some context on that?

Timothy FitzGerald -- Chief Executive Officer

Yeah. Mirc, so I would say -- I mean, just so, obviously, we've been reporting orders. And we keep saying, we're going to get away from that. And I think we truly are now as we kind of came through COVID, but just maybe to give you a little bit of a flavor, I mean, in July, that trend generally continued in terms of our orders. So -- and so, as we said kind of in the comments, we do feel pretty good about the outlook for all three of our businesses as we go through the back half of the year. As it relates to COVID, we kind of know what the impacts of -- to a certain extent. Obviously, there's a lot of uncertainty, but really what the impact to our businesses from COVID, we all saw that play out over the last year. So I really don't think the variant is going to take us back. I mean, foodservice industry has proven extremely resilient. It obviously impacts the different segments, slightly different, but the ones that haven't recovered as much frankly lead to greater pent-up demand when they do recover, which is kind of what Steve was alluding to talking about school system. So we feel pretty good about the trends continuing and don't really expect a disruption from an order standpoint based on COVID.

Mircea Dobre -- Baird & Co. -- Analyst

Okay. And then, maybe a question on pricing. I mean look, the data out this morning on producer prices on commercial cooking equipment was reported up 13%. I mean, to me, it almost looked like a typo. So I'm not really asking you to comment on the reliability of government statistics here, but I'm curious since you're one of the major players in the industry, what are you seeing out there in terms of pricing? It sounds to me like you're saying, hey, look, pricing is going to be more of a driver in 2022. That seems to be a little bit of odds with again the data that the government has reported this morning. So maybe some context on that.

Timothy FitzGerald -- Chief Executive Officer

Okay. So I'll kind of go through at a high level. I might ask Steve to hit some tactics here. But I mean, we have taken price increase. I mean, I think just very at a big picture, it's a hugely dynamic backdrop right now. I mean supply chain issues have increased as we've gone through the year. I mean I think at the beginning of the year, we thought at the back end capacity would have probably increased the number -- across a number of industries, but I think as have all seen, that's not been the case or orders have outpaced the increase in capacity. So that's really led to increased supply chain disruption, and then the lack of availability has obviously led to higher and more dynamic pricing issues, right. So we're managing through that like all other manufacturers. I mean, I think we've been very proactive in measuring those cost increases and passing those along to our customers. So we're very resolute in that. And I think we're very confident that we will be able to do that just as we've always had, there tends to be some lag.

Now we have taken price increases. So I mean, it's not, that none of this will come into effect this year, but again you've got more of a delay. So I think the message you've got from us is that we're very focused on managing it as we go through the year as we have in the front half in passing those on. And we don't -- while we will have some impact as we work through quarters, we are very focused on our long-term margin targets, which are strategic. And we are -- and while we're managing disruption, we're not losing sight of where we want to be with margins as we go through the next couple of years and feel confident in our ability to execute on that strategy. So that's kind of a bigger picture. I'll maybe ask Steve to comment on government statistics.

Steve Spittle -- Chief Commercial Officer

I might leave the government alone for this call, but Mirc, I would just say as we thought about pricing throughout the year, I mean to piggyback on what Tim said, it's certainly a very dynamic, certainly not static conversation. So we kind of approached it in waves throughout the year. So you can go back to the beginning of the year, I would call kind of wave one when we took pricing to start the year. And I would say, we're in the completion of backside of implementing wave two of pricing, which I would say has been the most strategic. We tried to be extremely transparent with, especially the larger chains knowing those can be tough conversations, but I think again approaching from a very transparent perspective, really explaining where costs are on our side, what -- obviously, we're seeing commodities, what we're seeing in materials, and really trying to explain our pain points. And I think that from a tactic standpoint has been effective.

But then, I'll also say even though wave two is kind of wrapping up, wave three will certainly be coming more or less to start 2022. So we've tried to be very open with our customers that, hey, it is tough. We have tough discussions right now. We're in the middle of it, and it will continue certainly as we go into next year. So I would tell you from across all of our brands and across all of our team that manages our national accounts and key customers, it's one of the most important initiatives we have in the company right now.

Mircea Dobre -- Baird & Co. -- Analyst

Okay. That's helpful. And the last question for me is sort of a clarification. I mean, I appreciated all the guidance details that you've given, but it's going to take me a while to figure out what all of that actually means for numbers. If I'm thinking about the full-year outlook that you have provided roughly a month ago, has anything changed materially relative to that full-year outlook, either in terms of revenue or in terms of how you thought about margin and what was implied in that outlook? Thank you.

Timothy FitzGerald -- Chief Executive Officer

The simple answer, Mirc, is no. We are sticking with that, right. We do have line of sight to that margin amount, but I think we've been pretty clear. There are challenges there. What happens with Delta or hopefully not other variants I hope. But what happens in the general business and customer environment as well as maybe more significantly to our numbers, what happens with supply chain, right? Do things take a turn for the worse, right? And we're not -- haven't really baked in things worsening, nor have we really banked in things improving, right. So that view is based on the state today, which could obviously evolve. The revenue side is a little bit also potentially constrained for the same factors. I mean, we are certainly working to increase output, and as I indicated, we do think we will have some growth sequentially for each of the next couple of quarters, which gets us to that full-year number, maybe with some opportunity to overachieve slightly, but again, supply chain is the most constraining factor. But the overall take is, we feel those numbers for the year are still reasonable.

Mircea Dobre -- Baird & Co. -- Analyst

Okay. Thank you for taking the questions.

Timothy FitzGerald -- Chief Executive Officer

You bet.

Operator

[Operator Instructions] And our next question is from Joel Tiss with BMO.

Joel Tiss -- BMO -- Analyst

Hey, guys. How is it going?

Timothy FitzGerald -- Chief Executive Officer

Good. How are you, Joel?

Joel Tiss -- BMO -- Analyst

All right. You start opening up the door on too much information and the questions never stop. I just -- I wonder if you -- have you given us a sense of how much -- like how many basis points of margin impact that you might see from price cost, just recovering it, just more of a mathematical kind of question?

Timothy FitzGerald -- Chief Executive Officer

Are you talking kind of near term or medium term?

Joel Tiss -- BMO -- Analyst

In the second half. Yeah, the second half of this year.

Timothy FitzGerald -- Chief Executive Officer

Well, as I talked to -- as I mentioned with margins compressing or getting smaller in Q2 to a smaller modest degree, right, it is going to turn against us slightly, but I mean, you can do the math also with the forecast information that's out there and see that. The decline, if I speak in terms of round numbers, is 100 basis points is what we're talking about.

Again, as you noted, putting numbers out there is a dangerous thing, but I'm not going to avoid them completely, because they are out there. I look forward to when we get past these periods. And I can get back to normal Middleby of -- we will give you the results as the results happen, but that's kind of how the math does play out.

Joel Tiss -- BMO -- Analyst

Okay. And then, just more of an easy question on just stainless shortages, is that an issue or is it more on the controller side in terms of the supply chain? And just the way your conversations are going and what you're hearing and seeing, is that more of it will be cleaned up in 2022, or is it more of a second half of '22? Just any sense, that's all. Thank you.

Timothy FitzGerald -- Chief Executive Officer

Yes. So you characterized as easy question. I think that is the crystal ball question, which I think all companies are facing right now. I mean, I think there's a multitude of supply issues, right. So it's not just stainless steel, right. I mean, for us at any point in time, we're dealing with 100 plus supplier issues. I think what's unique about us is we have a phenomenal supply chain team and that team has gotten stronger as we've gone through the last several years. And there's a lot of cooperation, collaboration leveraging kind of the capabilities and relationships across Middleby. So I think that has led us to where we really have not had any major disruption in our business to this point. And I think that we will manage through it better than others. Certainly, steel is one of the headline items given it's one of our biggest input cost. And I think people are aware of that. I think it's a daily issue managing steel. I think given the scale of Middleby and the relationships we have our suppliers there, we've done pretty well of been able to obtain supply.

In terms of timing, I think that again crystal ball. I think, this is -- supply chain issues, we will be dealing with certainly into 2022. It's hard to say when the manufacturing world gets beyond that, but I mean, that is going to be something that we're very focused on throughout the year. And I think, as you listen to the industry analysts out there and as we talk to our suppliers, I mean, I think it starts to improve probably as we go through the first part of next year, but probably hangs on until the middle of next year. But again, I would say that's a crystal ball answer. So significant disruption and uncertainty through the back half of the year, improving as we go through the front half of next year, perhaps normalizing as we get through somewhere in mid-2022.

Joel Tiss -- BMO -- Analyst

All right. Thanks very much. At least you guys have a crystal ball, we only have like that Magic 8-Ball. All right. Thank you.

Timothy FitzGerald -- Chief Executive Officer

Thanks.

Operator

Our next question is from Jeff Hammond with KeyBanc Capital Markets.

Jeff Hammond -- Keybanc Capital Markets -- Analyst

Hey. Good morning, guys.

Timothy FitzGerald -- Chief Executive Officer

Good morning, Jeff.

Steve Spittle -- Chief Commercial Officer

Hey, Jeff.

Jeff Hammond -- Keybanc Capital Markets -- Analyst

So just on -- there's a lot of labor issues out there. And I'm just wondering if, one, you're seeing any kind of slowing around new store openings as people make sure they have the appropriate labor or conversely, if you're seeing a lot more uptake on kind of labor efficiency-driven products?

Timothy FitzGerald -- Chief Executive Officer

Steve, do you want to take that one?

Steve Spittle -- Chief Commercial Officer

Yeah. So, Jeff, I don't think we've seen a slowdown in new store openings from the bigger chains. I mean, they've all been pretty open with their projections for kind of the rest of this year and certainly, in the next year. I have not seen a slowdown on that front. Now, I do think they have a great challenge ahead of them. You have this dynamic of -- again, probably speaking more to the QSR segment at this point, where the new stores are coming from, but they have a real challenging dynamic of they're trying to improve speed through the drive-thru, which has always been a challenge for them and even taking a couple of seconds out of the drive-thru can be a big deal. And so, you see a lot of emphasis on that front just to expand capacity through drive-thru.

Meanwhile, you have this dynamic of they can't find labor in the kitchen. And then, the impact of not having labor is, of course, extended drive-thru time. So they have a huge dynamic they have to solve. And I think it well positions us for equipment that could be used to take labor out and increase drive-thru capacity. So I don't know if you have anything, James, maybe kick it to you to from a product standpoint of things we've seen that can help just in our discussions overall.

James K. Pool -- Chief Technology and Operations Officer

Yeah. I think, talking -- we certainly talk about what our products day-to-day can do to reduce labor, grow efficiencies. I think one of the systems that we have out there that now is really getting more and more traction is the Open Kitchen platform through its ability to really automate all facets of the restaurant from the front-end operations all the way back to equipment connectivity and also providing automated task management within the space. And we see customers turning to these technologies because of the labor issues that we're all seeing. So I think we're well positioned from a product standpoint. And as we develop the products that we have in the pipeline, we will be even more positioned in the future to address the labor issue, which will probably likely not subside.

Timothy FitzGerald -- Chief Executive Officer

Yeah. I would just cap it off and repeat a little bit because I have to be repetitive. But labor, Jeff, you're asking the question right because it is a massive issue for our customers right now. And I think we're uniquely positioned with our solutions, right, like we've been going after technology and innovation here. And if you think about a lot of things that James has talked about in slide decks and so forth, it's automation that we can bring to our customers to really solve what is today their number one issue.

Jeff Hammond -- Keybanc Capital Markets -- Analyst

Okay. Great. And then, just maybe some color on Novy. Can you talk about the -- what the purchase price was, margins look pretty good, but what's the long-term opportunity to take margins up, and then just kind of cross-fertilization and revenue synergy opportunities?

Timothy FitzGerald -- Chief Executive Officer

Yeah. So I'll make couple of comments. I know our Q is coming out later today. So I'll kind of leave the purchase price for that. But as you mentioned, Novy's margins are strong already, right. So I mean, as we bring it into the platform, it's not diluting and perhaps additive to our margins, which is great. Certainly, we think there are many synergies with Novy on, I would say, growth number one. Certainly, there are synergies from a profit standpoint as well as we kind of think about areas that we can leverage across the businesses. But we are excited about the product platform built. And it is a growing market, and that's an area that we've been developing products, but Novy really kind of adds to our focus there. And certainly, they are very strong in the markets that they're in right now, particularly Europe and the Benelux area, but the opportunity for those products in markets such as the UK and the US is strong. So certainly, we see a lot of strategic merits on all those fronts.

Jeff Hammond -- Keybanc Capital Markets -- Analyst

Okay. Appreciate it.

Timothy FitzGerald -- Chief Executive Officer

Great. Thank you.

Operator

And that is all the questions we have for today. I'd now like to turn the call back over to management for closing comments.

Timothy FitzGerald -- Chief Executive Officer

Yeah. Thank you, Tina. And thanks everybody for joining us on today's call. I appreciate everybody joining in, and we look forward to speaking to you next quarter.

Operator

[Operator Closing Remarks]

Duration: 46 minutes

Call participants:

Timothy FitzGerald -- Chief Executive Officer

James K. Pool -- Chief Technology and Operations Officer

Bryan Mittelman -- Chief Financial Officer

Steve Spittle -- Chief Commercial Officer

Timothy Thein -- Citibank -- Analyst

Lawrence T. De Maria -- William Blair & Company -- Analyst

Mircea Dobre -- Baird & Co. -- Analyst

Joel Tiss -- BMO -- Analyst

Jeff Hammond -- Keybanc Capital Markets -- Analyst

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