Thank you for joining us today for The Middleby Corporation First Quarter 2022 Conference Call. With us today from management are CEO, Tim Fitzgerald; CFO, Bryan Mittelman; Chief Commercial Officer, Steve Spittle; and Chief Technology and Operations Officer, James Pool. We will begin the call with opening comments then open the lines for questions. Instructions on how to get into the queue will be given at that time. Also, please be aware that a presentation to accompany the earnings announcement is available on the Investor page of middleby.com. Now I'd like to turn the call over to Tim Fitzgerald. Please go ahead, sir.

Great. Thank you, Andrea, and thank you everybody for joining us today on our first quarter earnings call. We started the year with momentum building upon the progress we made in 2021 and continuing to execute upon our financial and strategic initiatives. Financially, we posted record sales and earnings for the first quarter, and we were able to largely maintain our profitability, while facing unprecedented inflationary impacts. Supply chain disruption and the related cost impacts have become increasingly challenging as a result of the recent COVID shutdowns in China and the impact of war in Ukraine. Operationally, we remain focused on increasing our production to support our significant backlog, which again increased in the first quarter with incoming orders outpacing revenues. Our teams continue to execute in the face of daily challenges affecting parts availability with concerted efforts to work with our strategic vendor partners to minimize disruption operations. And we also continue to make investments in manufacturing equipment, facility expansions, and people all in an effort to increase production capacity. While the additional recent disruptions to supply chain have placed further challenges on our operations. We increased shipments to a record level in Q1 and we are committed to continuing improvement as we progressed through the year. As we continue to manage operating challenges and the related margin pressures, we are not losing sight of our long-term profitability goals set forth for each of our three business segments. We continue to invest in R&D and launched new product innovations with a focus on increasing profitability of our sales mix. While pricing actions already enacted early in the second quarter should offset the most recent wave of supply chain cost increases with the benefit realized in the second half of this year. While overall market conditions generally have become more…

Thanks, Tim. I'm happy to introduce Middleby One Touch. Middleby's new control system that expands our brands, segments, and our customers. The One Touch is a combination of two-years of effort to standardize Middleby's controlled platform. One of the many strengths of Middleby is our brand individuality. But when it comes to controls, the need for a singular Middleby control system was ever so obvious, especially as we continue to acquire brands. To do this we focused on several key areas of development. First, we wanted to provide a lightning-fast and fluid control environment with seamless connectivity to our open kitchen IoT platform to satisfy our Gen Z to our Gen X customers. Expanding on connectivity, the Middleby One Touch controllers are open kitchen ready. This allows our customer base, the ability to purchase open kitchen connectivity at the point of equipment sale, thus providing our customers a straightforward hassle-free way to connect and onboard their equipment, while also providing them a future-proof IoT platform for the additional Middleby equipment purchases. Next, we focused on the user experience, which is timely, given the current state of the labor within our industry and the struggles around training. Our work in the Middleby user experience yielded a single user experience that works across all Middleby products, whether a Pitco fryer, a Firex, a TurboChef rapid cook oven and Middleby Marshall conveyor oven, a CTX, a Taylor soft serve machine to name a few. Once a customer uses a Middleby One Touch control, they will forever become a power user for any Middleby One Touch product. Lastly and most importantly in today's environment, supply chain. The effort focused on reducing the number of control SKUs across the brands to essentially three different One Touch controls. One for high-touch high-use products; one for mid-touch…

Thanks, James. For the quarter, we again generated record results with revenue over $995 million and adjusted EBITDA of $197 million. GAAP earnings per share were $1.52, adjusted EPS, which excludes amortization expense, and non-operating pension income, as well as other items noted in the reconciliation at the back of our press release was $2.13. Year-over-year revenues grew over 31% or nearly 12% organically. Adjusted EBITDA of $197 million reflects growth of over 22%, compared to the prior year or 9% on an organic basis. Our margin was nearly 20% of revenues. Commercial foodservice revenues globally were, up 11% organically over the prior year. The adjusted EBITDA margin was just over 24%, all the margin values I will discuss are on an organic basis as well, meaning, excluding any acquisitions and FX impacts. In residential, we saw organic revenue growth of 16% versus 2021. The adjusted EBITDA margin was nearly 22%. Please note that this excludes the late December acquisitions of the outdoor grill companies. As you are reviewing our reported results, please keep in mind a few additional key points. At this time, the acquired businesses have a lower margin profile than the remainder of the segment. Also, purchased accounting impacts from valuing acquired inventory negatively impacted reported gross margin and operating income by over $14 million for the quarter. This accounting nuance, however, is excluded from our adjusted EBITDA metrics. In food processing, organic revenues increased 8.4%, and the adjusted EBITDA margin was 19.4%. Across the company, we continue to face supply chain and inflationary challenges, as well as the impacts of COVID, which in turn impacted operations and production efficiency. These factors all affect our margins in hinder our ability to produce at higher levels. For the past quarter, these challenges most dramatically affected margins in the…

Thank you. [Operator Instructions] Our first question comes from Mirc Dobre from Baird.

Yes. Good morning, everyone, I also appreciate talk at Tuesdays. So, thanks for that commentary. Maybe Bryan, I'm looking to maybe clarify things a little bit --

Yes.

I kind of heard two conflicting things personally I heard that Q2 revenue and margin maybe they were going to be better sequentially relative to Q1. But then you kind of talk about Q2 being in line with Q1. So, which is it?

Yes. Total company in line, right? It's -- residential will be challenged, Food Processing, a little bit better, commercial likely a little bit better as well, right? And so and, yes, kind of add them up, it gets to my comment of overall Q2, similar to Q1 for consolidated results.

Consolidated results. Okay, that's helpful. And then of course, you highlighted that some slowing has occurred. So, additional context there would be helpful. Maybe the geographies that were this might have happened segments product lines really anything that you can mention there would be helpful?

Yes. So, I think China, as you might expect given some of the lockdowns, is kind of market that's been affected not only in terms of supply chain, which is an obvious one, but also in terms of orders in that region that's had some effect. I think as you look across the segments, the one that we've seen, have more impact is on the residential, as Bryan mentioned, we still remain. And this is more recent phenomenon obviously has been a lot of disruption in the market. So, we'll see how things evolve, but even as things have slowed there a bit, it remains ahead of 2019. So that, those related to the areas to call out. Obviously, there is some disruption in Europe as well, but that's probably to a lesser extent.

Understood. On the residential side, your business there has grown and you've made some acquisitions of late as well. The revenue contribution, I think from acquisitions in residential was higher than we were initially modeling. So, I guess my question to full here from a seasonal standpoint, I'm presuming that the likes of Kamado Joe and Char-Griller and so on. Normally see like an inventory stock that kind of happens in Q1. How do you assess inventories in the channel? And then the second part of the question is on the -- what I would console to be the core portion of the business, Viking, AGA, and such. From -- you talk about slow -- a bit of a slowdown, but how are you kind of defining that? Is it in terms of increase that you've seen in your stores? Or is it something else that you're using to kind of sort of define those market dynamics?

Well, I guess, kind of the slowing, and we're just going to talk about recent order activity over the last handful of weeks again ahead of 2019. But obviously, we've had significant growth over the last year and a half. So, I think we're seeing that come off, we’re little bit right now, but again ahead of 2019. There is not much inventory in the channel, right? Like, I mean, I think we've been, that's pretty much true across all segments, right? We haven't had the ability to catch up to our backlog, so that is still true. Certainly, we have a large backlog in residential, which will be catching up to as we continue to move through the year hence lot of the comments that we make about investing in our operations. You can see our CapEx has gone up over the last handful of quarters as we've really invested in fabrication equipment and really expanding production, et cetera. On the grill companies, there is a seasonal, it's a little bit different across the brands depending on geographies. But typically, you have a build for grill season. So, you tend to be a bit heavier in the first quarter, which haven't -- and that starts typically in the fourth quarter into the first quarter and in early parts of the second quarter. I'll just mention there, I mean, as we kind of look forward, because obviously, the world changed a fair bit as we left the quarter going into Q2. China will affect some of those new grill companies more than I'll say the broader residential platform, because we're largely localized in U.S.-based manufacturing, but in that business, we get more of the product is getting shipped there so. So, from a production standpoint as you kind of think about mix going into the second quarter, those new grill companies would be likely more effected with production and given the recent shutdowns that have been headline news. Of course, that depends on how things progressed through the quarter. But I would like to point out, for the first quarter under Middleby with the acquisitions, we were started off as Bryan said dilutive to the overall margins, but we were about 12% EBITDA for those businesses to start the year. So, I mean, I think we felt kind of good about how we posted in the first quarter. And I'll say that I mean we've got multi-year strategy here, investing in the platform innovation brought to market, but we feel -- continue to be despite the disruption early on, very excited about that platform and the growth opportunities, as well as the targets that we have mentioned about the journey to 20% EBITDA margins over the next three years.

Okay, understood. If I may one final question, on the Slides that you put out this morning on Slide eight, you've got a pie chart there talking about revenue by demand requirement. For one point really interesting, and in here, you said that replacement and upgrade, which is more than I thought of your business is still down or was down 13% relative to pre-COVID in 2021? I'm sort of curious to get more context from you as to why you think that is the case, why replacement has lagged as much of it has, and what are some of the implications here as we're thinking about '22 or '23? Thank you.

Yes, good morning, Mirc, it's Steve. So, I would read into it maybe a little bit of a different take. Not as much replacement being down just, because -- I think it's more of the new builds have just increased as much as they have. So, yes, that's you're primarily driven by the QSR segment over the last six to 12-months you having such aggressive new-build plans that we saw last year. They have not taken the foot off the gas for this year and still pretty strong. What they shared with us going into next year. So, I think it's more of a function of the focus on the bigger chains on new builds. Not as much hey, we're seeing replacements shifting away. I just think it's the new build emphasis. I still think once we get through this new build period that we're in, again I think based on the feedback from QSRs that last, the next 12 to 18-months, I do think you see a replacement cycle pick back up again as we get into probably next year and in 2024. So, that's how I would think about the breakdown and the change in the pie chart from 2019.

Yes. Very helpful, thank you.

Our next question comes from Tami Zakaria with JPMorgan.

Hi, good morning. Thank you so much for taking my questions. So, my first question is, I think you mentioned you're expecting results to improve from the back half of this year and into next year. Just wanted to clarify, do you expect sequential improvement in both the top line and EBITDA margins in each segment, as you go into the back half?

Yes. I mean, that really is the simple take on it, right? Given our backlogs, given pricing actions, and then that sets us up for those improvements, and then we will see the risk remains on supply chain and input availability should that improve right that becomes the tailwind we're waiting to pick up influence.

Got it. Thank you so much. And my other question is can you comment -- how did orders trend throughout the quarter by segment? And I think you took a price increase in April. Did that have any meaningful impact -- pre-buy effect on orders?

I think we gave some pretty -- I mean obviously, we've been given order outlook for a while. I don't think we -- in terms of by segment, I think we're in a price start moving away from that a bit. I mean, I think they were pretty solid throughout the quarter, we've made some comments really as we kind of entered early April here. I mean, I think as we mentioned, we continue to have overall double-digit increase in orders in Q1, we haven't posted that, but I mean, we saw continued trends at the beginning of the year, but as we've kind of moved into the April period, that's where we've seen it slow a bit. The pricing, just because we went through the -- the dynamics have changed quite a bit. This is not surprising to anybody, right like the impacts of the war, as well as China, I would say we had incremental inflationary impacts that started to affect us in March. A lot of the -- what we saw coming out of those issues are, we're pretty quick responses of cost increases from our supply base. So, and that was kind of new and incremental to the year. We were implementing a price increase in April already. So, one of the things that we've done is capture those price increases very quickly and the price increase that we took in the beginning of April was significantly larger than we originally anticipating. So, I just want to kind of set a little bit of a perspective here. I mean, I think we saw -- we were expecting to have kind of an inflection point in Q2 of where we would see margins start to expand. But now we've got a new wave of price increases, which we've addressed that kind of pushes things for another, let's say, quarter to two given our significant backlog, but we are confident that the price increases that we've taken already capture what we've experienced so far with a lot of the recent cost increases that certainly we didn't anticipate at the beginning of the year given what the drivers for those increases have been. So, that kind of bakes into the comments that you here on margin. So, the story remains of we are expanding margins. So, pricing to capture the inflationary costs, operational issues, operational actions as well as kind of the investments we're making in our R&D and products that are also evolving our sales mix to expand our margins which heads. That story is intact push a little bit to the right, but hence our expectations for drawing margins in the back half of the year.

Got it. If I can squeeze in one quick one, do you have any other price increases planned for the rest of the year?

Tami, as of right now, nothing is planned currently. But as we continue to monitor the ongoing dynamic of cost pressures we see on our side, and just the overall market, if we have to go back to the marketplace with additional pricing, we certainly will. But at this point, there's nothing planned for the back half of the year.

Got it. Thank you so much.

Thank you.

Our next question comes from Saree Boroditsky with Jefferies.

Thanks for taking my questions. So, just staying on the price topic. Given the price cost headwinds expected in the second quarter, could you just talk about your ability to price for inflation across the segments? Particularly if you see more challenges pricing in the residential's to consumers versus the other segments?

We've taken action at all three. I mean, I think our portfolio and leadership and each one I mean, I think pricing has been sticky thus far we've been able to pass those costs on. I mean certainly, we are probably most sensitive to the residential part of the market, but I just also kind of point out that the premium end that we play in is not only the housing market has shown to be a little bit more resilient, but that demographic, the customers -- let's say there is a little bit more ability to cover the price in that segment of the market.

Great. And then just on Food Processing, you highlighted large protein projects. Could you talk about the cadence of those projects as we think about the remainder of the year and into 2023? And then what's driving that demand as I believe there has been less investment in some of those categories such as hot dogs in recent years?

Yes. No, I mean, I think you can look at a lot of large protein producers and they actually have a good number of investment products -- investment projects going on. We do a lot more than hot dogs and there's a lot of trends driving cured meats, alternative proteins. I've said in other things are escaping me at the moment, but again a variety of our customers have talked about expansion plans. And those are items that we will see more impact as we build the equipment really back half of this year, front half of next year and some of them might even go beyond that, right? So, that's why it's -- these are projects that generally take over a year to get done. So, certain things come in and out of our food processing orders and backlog very quickly and others like the large projects again can sit in the backlog for six, nine, 12, 18 months.

I appreciate the color. And then one last one from me, could you just talk about the M&A pipeline? And if you've seen a pick-up in the competition for some of these assets more recently?

So, obviously, it's one of the hallmarks of Middleby will be doing acquisition for a long time, and I think posted in the slide you can see even in the first quarter of a couple of additional, I would say product line of technology add-ons. So, the pipeline remains strong, certainly as we broaden the portfolio we have lots of different strategic ideas and themes that we continue to pursue and anticipate that we'll have another busy year with acquisitions. I mean over time competition for acquisitions has always been there. So, I mean, certainly, it ebbs and flows. But I think typically when there is strategic assets that we are kind of very focused on, we've had a high hit rate of bringing those. And so, I would expect us to continue as we have done historically.

Great. Thanks for your time today.

[Operator Instructions] Our next question comes from Jeff Hammond with KeyBanc Capital.

Hey, good morning.

Good morning, Jeff.

Just on commercial foodservice, I'm wondering, if you can just give us a sense of that 11% organic in the quarter. How much was price? How much was volume?

We don't break that out specifically, Jeff.

Okay. And I guess as you go forward, I guess there's two levers. One, you're pushing more price. So, I'm assuming that the price component kicks higher, but just as you think of kind of people adds, capacity adds. Obviously, this huge backlog. Just how we should think about volume sequentially in the Commercial Foodservice business?

Yes, I think in the short term, as I said, we're somewhat -- we have been volume constrained by a variety of components, sight? And its product availability. So, we are certainly eager for the volumes to be stepping up more meaningfully and some of those things are -- will take time to improve, right? There is a lot of speculation on landing old controls in chips. The backlogs will alleviate nonetheless each day, we're doing a variety of things with our supply chain folks and across our divisions to address the problems that come up. So, I'd say, the volumes have been up modestly. And we obviously still have a ways to go there.

Okay. And then in -- go ahead.

Yes. Hey, Jeff. So, I just kind of remind. So, I mean we started to see inflation back in the kind of third quarter. So, we took a price increase in August. That was probably the smallest one we've taken, which I would say that's coming through at the beginning of the year. We took a more meaningful one in let's say the November timeframe, which we may have seen some of the initial benefits of that, but that will probably start to flow more in Q2. And then obviously we just kind of talked about this April price increase that we took which was originally capturing a lot of the cost increases that we saw in December, January, and February time frame and now it stepped up to pick up a lot of the cost increases from China, COVID, and war impacts. So, that will come in, let's say the back half of the year. So, I'm just kind of reminding you the sequence relative to pricing. So, some of the benefits of pricing that we've taken even last year is not shown up yet. So, that will start in the second quarter. And --

Okay.

And maybe just a little bit more color on shipments, I mean just going to put it in two categories. One we have disruption every day, which our teams do a tremendous job dealing with which affects what's going down the line. And you think you're getting things out the door then you're kind of need to hold up production. So, that -- those are kind of uncertainties that pop up all the time. Then there is just kind of the -- let's say, key components which are limiting our production, right? Like we can ship a lot more if we could get more of a certain control, certain electronic component may be some key -- other components. And so, we've been working with a wide variety of suppliers to have them increase their production as well, right? So, yes. So, our expectation is, some of that will start to turn on in the back half of the year and hence that will allow us to increase some of the throughput in the factories. Now, we say that with a lot of uncertainty and a lot of hard work that's being done, but I mean I think those are the efforts that have been underway for a while and we've -- that's where we work closely with a lot of our strategic suppliers that make sure they're making the proper investments in their businesses as well.

Okay. And is the supply chain issues related to kind of COVID in China isolated to Residential Kitchen and more -- or more broad than that? And then the weaker revenue in Residential Kitchen in 2Q, is that purely a function of supply chain or is there some of that demand weakness that flows through?

Yes. None of the demand weakness and you know what, I shouldn't have used that word. I mean, the demand is still very strong. It's just the residential demand was amazingly strong in the first half of last year. And again, we are still well above pre-COVID levels. Again, we just had really, really strong demand. The first half of next year. So, I'm not going to use that W word. But in terms of coming out of China, It is -- it certainly has a dramatic impact on some of the businesses in China. And then, but for the rest of Residential, yes it is overall supply chain impacts that are limiting our ability to get more volume out across the segment.

Okay, thanks so much.

Yes.

Our next question comes from Larry De Maria from William Blair.

Hi, thanks, good morning. We've obviously talked a lot about orders and stuff without these specifics, but as it relates to second quarter or first quarter orders and orders since closed at April into May, is price and volume both up for orders including current or we start to see volume flip maybe in residential in the orders?

As compared to what periods? Because I think I just --

Year-over-year growth in organic orders, they are up year-over-year as you guys said.

Yes.

But I'm curious that how much of that is, let's say, from a high-level price versus volume which I understand is volume if you continue to contribute or volume is softening?

No. We don't think overall that the volume is softening.

And that's fair --

It's -- I mean -- yes, I don't think we're going to get into orders by segment versus last year, right? That's what we said we're moving away from.

But I think you can take from Bryan’s prior comment that relative to a very strong first half of last year residential volume is softening, but it still remains well ahead of 2019.

And 2020?

Level, so I mean effectively that's what he is saying.

Okay, fine. And then usually you guys have first half, second half split where the second half is a little bit bigger. Is it going to be -- Could you maybe just help us understand the split maybe for sales and EBITDA, and we know the second half is more pressure on that now with the price increases and better price cost et cetera. But is it going to be much more meaningful than your average first half to second half split if you go back?

So, clearly, we think the second half of this year is better than the first half, both in terms of revenue and profitability and margins. I don't think we can compare it to any historical periods before, again we are living through unprecedented times and have never been in a situation where we have backlog and demand where we have it now. So, again, the outlook is great, right. Demand levels are higher than they've ever been. We have a lot of backlog and so, I look forward to what the back half of the year and next year and the year and the year after that are going to be. But again, the fundamentals or the overall market dynamics we're in now are such of that comparing it to prior periods is really apples and oranges.

Larry, as you go just very simplistically as not forecast, but as you think about we have all the cost running through largely right now, right, like we had all the inflation. Q4, maybe not all we've experienced the last three years, we've got all the increase and really we haven't got the pricing that we've already taken has not -- we haven't gotten much of that benefit, right? So, kind of hence, and again, this last wave is pushed it a little bit more to the right, but I mean just to your point, fundamentally we've got the cost now, not all the price and we're kind of holding the line on margins. So, we get to the other side of that hill. And I think the holding the margins that is some of the benefit of the strategic and operating initiatives that we had been executing on that still the benefit over the next couple of years, but I mean I think that's kind of where we're at in this continuum of supply chain.

Okay, thank you very much.

Okay. Thank you.

[Operator Instructions] Our next question comes from Mik Dobre with Baird.

Hey, thanks for taking the follow-up. Just a quick one here. So, interesting sort of use of cash in the quarter, your operating cash flow was negative. I think we understand that, but then you've gone and you repurchased $155 million of stock, and you also bought nearly $10 million of cap calls, right?

Yes.

For your converts. And I guess I'm looking for maybe some color from you guys in terms of how you're thinking about share repurchases going forward given kind of where your leverage is, but also where your M&A pipeline stands? Taking into account the fact that right, I mean, the stock has pulled back it's pulling back further today. And then what's the reason behind the cap call the additional cap call purchase? I mean that the stock is nowhere near the point where we'd be thinking about the dilution from the converts.

Well. Fortunately, we still have 3.5 years until the converts mature, and our outlook is very positive. And the cap call really is just I'll call it a way to use leverage to obtain stock and address dilution risk rating. Obviously, we've committed much more to share repurchase than the cap call. I think as we've looked at the recent share purchases, we really have kept in mind again seeking to address the potential dilution risk from the convertible notes, but obviously, M&A continues to be a priority for us as we obviously haven't steered away from that at all. And I'd expect us to still be very, very committed to M&A, and will consider if additional buyback activity is prudent along the way, to your point, as we look at leverage levels as well.

But sorry to press you on this, but --

Yes. No, go ahead.

Should investors expect you to step-in in more meaningful fashion in terms of buybacks given the disruptions in the volatility that we're kind of seeing your near-term or is Q1 more of a one-off?

I'm sorry, is Q1, more of a what?

One-off in terms of --

More of a one-off in terms of the buybacks.

Yes. I mean I think, again, maybe encapsulate what Bryan said but that action that we took was I'd say very much tied to the convert and the capped call, right. I mean I think we thought again some of the things that have occurred that have made its way into the overall market not just start our stock that was prior to that, but we have very positive outlook. And we wanted to make sure that we were minimizing the cost in dilutive effect of the convert when it matures. So, it is very much tied to that. But I think we're not going to say we're going to do here, but I mean historically we've done some share repurchases. So, separate from the cap call on an opportunistic basis. So, I wouldn't rule that out. But I'm not going to say we're going to do right now from a quarter perspective, but certainly, we believe in the strategic initiatives and where the company is headed, we -- despite some of these near-term challenges we're all working through, we've got a very confident positive outlook where we're going into the next several years. So, with that, when there are pullbacks in the stock, we will still consider to be opportunistic from time to time.

All right. Understood. Thank you.

Our next question comes from John Joyner with BMO.

Hey, thank you for taking my questions. So, can we go back again to the comments about 2Q being similar to 1Q? I mean are you referring to sales or EBITDA dollars on the segment level? And I guess with commercial and processing, you mentioned forecast to be better maybe slightly better, and residential worse and how much worse are you assuming for residential?

So, just to clarify, right. The comments, Q2 similar to Q1 is the overall total company consolidated outlook, right. And you heard it right commercial up, food processing up, residential challenged. I don't know that I want to get into much more granularity about that but I do note that the China lockdowns right are having a significant impact on portions of our business to have product available to us. And we believe that will hopefully be a relatively short timeframe phenomenon. Now, we've talked about that we're not able to sequentially take huge jumps, right now, so I mean I'll let you do your modeling on how much the other two's kind of ops would need to be to offset down in one but hopefully a little bit I comment there maybe are able to let you put some size, the magnitude of the swings a little bit.

Okay, all right. Thank you, Bryan. And then for processing, the margins that -- I mean the margins that are good but with the business not being affected by drags from acquisitions and you highlight large protein projects, which I believe generally carry higher margins.

Yes.

And it's good to know that it's not just hot dogs. Is there something structural that would prevent I guess processing EBITDA profitability from getting back into the mid-20's?

I mean, no, I mean that's, that is certainly the goal, right? Where I use the word soft and had a more modest tone about the business, obviously, we are disappointed even though we had industry-leading margins in that segment. So, thanks for noting that. The first digit wasn't two. But where it is a business that works on large projects where you do have absenteeism issues, right? It seems like a long time ago but let's not forget the impact on COVID, on employees and the workforce back in January and February. So, the impacts of COVID, how much steel we could bend and put together, and then also when you start operating at lower levels, what that means to coverage of fixed cost is where even admittedly where we came in Q1, while again appreciate noting is good, it wasn't great for Middleby standards and we do expect to be better than that for the remainder of the year. The large projects again take some time to happen. So, it's not like all of the sudden, you're going to see a huge jump in revenues and margins in Q2. But as we get into the back half of the year and into '23, as we start delivering on more of these projects is why I feel comfortable agreeing to what you believe the outlook could and should be.

All right, thank you. And then maybe just one more. On the with -- I guess what was the organic growth? Do you have that available for the domestic and international businesses for the commercial segment?

I do. It was I think 7% in North America and 21% outside of North America.

Okay, excellent. Thank you. And so can you maybe give any color around any of the targeted markets I guess for the international peace? And I guess for some of the countries on the international side, do you have a good feel for like the currency effects for this year?

We don't specifically forecast currency effects. Obviously, the dollar is strengthening. But I'm sorry, I don't have specific kind of model and commentary to offer there.

Okay. Any color around like -- any specific markets on the international side that we're --

Yes.

Like jump out or not?

I mean, obviously, China has been weak for us. Europe has been a little bit more modest. I would say the good thing is, it is certainly not falling off a cliff. Obviously, right there a lot of concerns about what is the impact in the European economy with the war that's going on right with the consumers have proven to be I guess using one of our favorite words a little bit, resilient. So, we're still seeing positive -- some positivity there, right? It hasn't moved in the negative direction.

Okay, Excellent. Thank you very much.

You bet.

That's all the time we have for questions. I'd like to turn it back over to management for closing remarks.

Well, we just like to thank everybody for joining us on the call today. And just reiterate that we're very excited and optimistic about the business right now. So, despite the challenges in supply chain that we've obviously spent a fair bit of time talking about on this call. Certainly, a lot of the long-term initiatives that we continue to execute on with new products, innovation, route to market, which we are very confident are going to allow us to expand margins in the long run and drive our business are all intact. So, but I appreciate everybody's participation in the call and we look forward to speaking to you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.