Financial Performance - Net sales for fiscal 2024 decreased by $161.4 million, or 4.0%, to $3,875.2 million compared to $4,036.6 million in fiscal 2023[174]. - The Commercial Foodservice Equipment Group's net sales decreased by $102.2 million, or 4.1%, to $2,419.3 million in fiscal 2024[175]. - Gross profit decreased to $1,470.4 million in fiscal 2024, with a gross margin rate of 37.9% compared to 38.0% in fiscal 2023[176]. - Selling, general and administrative expenses decreased to $762.5 million in fiscal 2024, representing 19.7% of net sales[177]. - Income from operations increased by $21.3 million to $656.2 million in fiscal 2024, with an operating income margin of 16.9%[181]. - The Food Processing Equipment Group's net sales increased by $10.4 million, or 1.4%, to $731.0 million in fiscal 2024[175]. - International sales for the Food Processing Equipment Group increased by $46.3 million, or 19.2%, to $287.6 million in fiscal 2024[175]. - Domestic sales for the Residential Kitchen Equipment Group decreased by $52.2 million, or 10.2%, to $461.1 million in fiscal 2024[175]. - Gross profit at the Commercial Foodservice Equipment Group decreased by $52.3 million, or 5.2%, to $958.3 million in fiscal 2024, while the gross margin rate slightly decreased to 39.6%[182]. - Gross profit at the Food Processing Equipment Group increased by $16.2 million, or 5.9%, to $290.6 million in fiscal 2024, with a gross margin rate of 39.8%[182]. - Gross profit at the Residential Kitchen Equipment Group decreased by $31.4 million, or 12.6%, to $218.6 million in fiscal 2024, with a gross margin rate of 30.2%[182]. - Net sales in fiscal 2023 increased by $3.7 million, or 0.1%, to $4,036.6 million, with a 3.0% increase attributed to acquisitions[186]. - Net sales of the Commercial Foodservice Equipment Group increased by $126.7 million, or 5.3%, to $2,521.5 million in fiscal 2023[188]. - Net sales of the Food Processing Equipment Group increased by $130.6 million, or 22.1%, to $720.6 million in fiscal 2023[188]. - Net sales of the Residential Kitchen Equipment Group decreased by $253.6 million, or 24.2%, to $794.5 million in fiscal 2023[188]. Cash Flow and Financial Position - Total cash and cash equivalents increased by $442.0 million to $689.5 million at December 28, 2024, from $247.5 million at December 30, 2023[198]. - Net cash provided by operating activities was $686.8 million, up from $628.8 million in the prior year[198]. - Net cash used for investing activities amounted to $158.5 million, including $111.7 million for acquisitions and $49.3 million for production equipment upgrades[201]. - Net cash flows used for financing activities totaled $73.8 million, including $32.8 million in net repayments under its Credit Facility and $34.7 million in share repurchases[202]. - The company believes its current capital resources will be sufficient to finance operations, debt service obligations, and capital expenditures for the foreseeable future[203]. - Working capital changes contributed to operating cash flows, driven by a decrease in inventory levels of $95.4 million[199]. - The company's balance sheet includes approximately 35% goodwill and 18% indefinite life intangible assets as of December 28, 2024[93]. Impairment and Taxation - The company recognized non-cash impairment of $33.4 million in fiscal 2024, primarily related to trademarks[180]. - The effective tax rate in fiscal 2024 was 25.8%, compared to 22.8% in fiscal 2023, reflecting state taxes and foreign tax rate differentials[185]. - The tax provision for fiscal 2023 was $118.5 million at an effective rate of 22.8%, compared to $127.8 million at 22.7% in fiscal 2022[197]. - The company recognized $33.4 million in impairment charges related to trademarks, primarily within the Residential Kitchen Equipment Group[222]. - The fair value of the Residential Kitchen reporting unit exceeded its carrying value by more than 8%, indicating no impairment of goodwill was recognized[217]. Strategic Initiatives and Risks - The company is targeting completion of the spin-off of its Food Processing business by early 2026, subject to customary conditions[166]. - The company is pursuing a spin-off of its Food Processing business, expected to be completed by early 2026, but there are risks of delays and unanticipated costs[116]. - The company invests substantial amounts in research and development to enhance existing products and develop new technologies[97]. - The company pursues strategic acquisitions and investments, which entail risks related to integration and management[108]. - The company plans to continue its growth strategy by pursuing acquisitions that provide opportunities for profitable growth, but may face challenges in identifying and completing suitable acquisitions[111]. - The company is expanding its international operations, which involves risks such as compliance with foreign laws and regulations, competitive conditions, and geopolitical threats[113][114]. - The company faces intense competition in its industries, with numerous competitors that may have greater financial and technological resources[95]. - Changes in purchasing patterns or loss of key customers could adversely impact the company's operating results[100]. - A significant increase in commodity prices, such as steel, could create upward pressure on operating results[101]. - The company is subject to risks associated with product liability claims, which could adversely affect its financial condition[103]. - The company's financial performance is subject to significant fluctuations due to various factors, including economic conditions and customer demand[106]. - The company may experience rapid growth, which could strain its management and operational resources[107]. - Approximately 5% of the company's workforce is unionized, and any work stoppages could materially affect operations[117]. - The company relies heavily on key personnel, and the inability to retain them could adversely impact business operations[118]. - The company faces risks related to cybersecurity, including potential data breaches that could disrupt operations and lead to financial losses[121][122]. - The company is subject to various legal and regulatory risks, including potential liabilities under environmental laws and compliance with tax regulations[123][125][128]. - The company is committed to reducing its environmental impact and has set targets for greenhouse gas emissions, but there is no assurance these goals will be met[127]. - The company may face unfavorable tax adjustments due to ongoing audits by tax authorities, which could adversely affect financial results[128][129]. Stock Performance - The impact of future transactions on the company's stock price is uncertain, and any announcements could lead to substantial fluctuations[115]. - The trading price of the company's common stock has been volatile, which may lead to substantial losses for investors[131]. - The company is preparing for the implementation of Pillar II effective January 1, 2024, and the remaining global minimum tax rules by January 1, 2025[130].

Core Insights - The Middleby Corporation (MIDD) reported fourth-quarter 2024 adjusted earnings of $2.88 per share, exceeding the Zacks Consensus Estimate of $2.50, with an 8.7% year-over-year increase despite lower sales [1] - Net sales reached $1.01 billion, surpassing the consensus estimate of $995 million, marking a 0.5% year-over-year increase, although organic sales decreased by 1.3% [1] Segmental Results - The Commercial Foodservice Equipment Group, accounting for 60.1% of net sales, generated $609.4 million, down 2.9% year over year, with organic sales decreasing by 2.8% [3] - The Residential Kitchen Equipment Group, representing 18.3% of sales, totaled $185 million, a decline of 2.1% year over year, with organic sales plunging by 2.4% [4] - The Food Processing Equipment Group, making up 21.6% of sales, reported $219.4 million, an increase of 14.4% year over year, with organic sales rising by 4.7% [5] Margin Profile - Cost of sales increased by 0.5% year over year to $624.9 million, while gross profit rose by 0.6% to $388.9 million, maintaining a gross margin of 38.4% [6] - Selling, general and administrative expenses decreased by 6.9% year over year to $178.4 million, leading to an operating income increase of 8.2% to $208.5 million, with an operating margin of 20.6% [6] Cash Flow and Balance Sheet - At the end of the first quarter, cash and cash equivalents stood at $689.5 million, up from $247.5 million at the end of December 2023, while long-term debt decreased to $2.35 billion [8] - In 2024, net cash generated from operating activities was $686.8 million, compared to $628.8 million in the previous year, with free cash flow reaching $640 million [9] Strategic Developments - Middleby announced plans to spin off its food processing business into a standalone public company, expected to be completed by early 2026, aiming to enhance strategic focus and capital optimization for both entities [10][11] - The food processing business reported revenues of $731 million with a 25% adjusted EBITDA margin, while the commercial foodservice segment achieved $2.4 billion in revenues with a 27% adjusted EBITDA margin [12]

Financial Data and Key Metrics Changes - The company reported a modest revenue decline in 2024 to approximately $3.9 billion, with adjusted EBITDA of $866 million at a margin of 22.4%, slightly ahead of the previous year [19][20] - Free cash flow reached a record $229 million in Q4, contributing to a total of over $640 million for the year [18][23] - Q4 revenues surpassed $1 billion, with adjusted EBITDA of over $251 million at a margin of 24.8% [20][22] Business Line Data and Key Metrics Changes - Food Processing segment achieved 4.7% organic revenue growth in Q4, resulting in revenues exceeding $219 million and an adjusted EBITDA margin of 29.6%, up 200 basis points year-over-year [20][21] - Residential segment reported Q4 revenues of $185 million, a sequential increase from Q3, but down 2.4% year-over-year, with an adjusted EBITDA margin of 13% [21][22] - Commercial segment's Q4 revenues were over $609 million, with organic revenues down 2.8% year-over-year, maintaining healthy margins over 28% [22] Market Data and Key Metrics Changes - The company noted gradual improvement in macro conditions for both commercial and residential businesses, despite challenges persisting [14][15] - The Food Processing business finished the year strongly, with expectations for continued growth driven by favorable long-term market drivers [15][19] Company Strategy and Development Direction - The company announced plans to separate its Food Processing business into a stand-alone public company, aiming to enhance strategic and operational focus for both entities [5][6] - The remaining Middleby Corporation will focus on commercial and residential kitchen equipment, with an emphasis on innovation and automation [9][10] - The company is positioned to capture market opportunities through strategic acquisitions and investments in new product categories [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the residential business, anticipating gradual improvement in 2025 [50][110] - The company expects low single-digit organic revenue growth across segments in 2025, with profitability growth rates exceeding organic revenue growth [30][31] - Management highlighted the importance of M&A activities and strategic investments to drive future growth [62][66] Other Important Information - The company added two new Board members, enhancing its governance and strategic direction [11][12] - The separation of the Food Processing business is expected to be executed through a tax-free spinoff by early 2026 [10] Q&A Session Summary Question: Can you walk us through the decision to separate Food Processing? - Management indicated that the decision was based on a long-term strategic review, believing that separation will accelerate growth for both entities [41][44] Question: What are the expected free cash flow conversions for the separate businesses? - Management suggested that both businesses could achieve 100% or greater free cash flow conversion, although specific long-range guidance for Food Processing is still being developed [46][47] Question: How do you view the recovery in the residential business? - Management noted that the residential business is at a cyclical trough but has significant growth potential, with expectations for gradual recovery in 2025 [49][50] Question: What is the leverage profile expected post-spin? - Management anticipates less leverage on the Food Processing business, allowing for more focus on M&A opportunities [95] Question: Are there any strategic alternatives being considered for the residential business? - Management confirmed that the residential business is continuously reviewed, but currently, it is seen as a strong platform with potential for margin expansion [72][110]

The Middleby Corporation (NASDAQ:MIDD) Q4 2024 Earnings Conference Call February 25, 2025 8:00 AM ET Company Participants Tim FitzGerald - Chief Executive Officer Bryan Mittelman - Chief Financial Officer James Pool - Chief Technology Officer & Chief Operations Officer Steven Spittle - Chief Commercial Officer Conference Call Participants Saree Boroditsky - Jefferies Ross Sparenblek - William Blair Mig Dobre - Baird Jeff Hammond - KeyBanc Capital Markets Brian McNamara - Canaccord Genuity Tami Zakaria - JPM ...

Core Insights - Middleby (MIDD) reported revenue of $1.01 billion for the quarter ended December 2024, reflecting a 0.5% increase year-over-year and exceeding the Zacks Consensus Estimate of $995.24 million by 1.87% [1] - Earnings per share (EPS) for the quarter was $2.88, up from $2.65 in the same quarter last year, representing a surprise of 15.20% against the consensus estimate of $2.50 [1] Revenue Breakdown - Commercial Foodservice revenue was $609.45 million, surpassing the four-analyst average estimate of $599.71 million, but showing a year-over-year decline of 2.9% [4] - Residential Kitchen revenue reached $185.04 million, slightly below the four-analyst average estimate of $186.56 million, with a year-over-year decrease of 2.1% [4] - Food Processing revenue was $219.39 million, exceeding the average estimate of $208.71 million, and showing a significant year-over-year increase of 14.5% [4] Operational Performance - Income from operations in the Commercial Foodservice segment was $145.31 million, lower than the average estimate of $155.48 million [4] - The Residential Kitchen segment reported an operating loss of $12.65 million, contrasting with the average estimate of a $7.11 million profit [4] - Food Processing segment income was $58.07 million, outperforming the average estimate of $50.56 million [4] Stock Performance - Over the past month, Middleby shares have returned -2.1%, compared to a -1.8% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Insights - Middleby exceeded expectations for Q4 2024 with strong earnings and strategic growth initiatives despite challenges in specific segments [1][2] Financial Performance - Adjusted EPS for Q4 2024 was $2.88, surpassing the analyst estimate of $2.52 by $0.36, reflecting a 14.3% increase [2][3] - Revenue reached $1.014 billion, exceeding forecasts by $18 million, with a year-over-year change of 0.5% [2][3] - Adjusted EBITDA was $251.2 million, marking a 6.8% increase from Q4 2023 [3] - Free cash flow was $229.1 million, down 4.6% from the previous year [3] Business Segments Overview - Middleby operates through three main segments: Commercial Foodservice, Food Processing, and Residential Kitchen, which cater to diverse market demands [4] - The Food Processing segment saw a 14.4% sales increase, with recent acquisitions contributing 10.2% to this growth [6] - Commercial Foodservice and Residential Kitchen segments experienced sales declines of 2.9% and 2.1%, respectively, due to decreased restaurant traffic and a slowdown in home sales [6] Strategic Initiatives - The company has focused on strategic acquisitions and innovation, with recent acquisitions aimed at strengthening its niche market presence [5] - Continuous investment in R&D is crucial, emphasizing automation and IoT solutions to enhance efficiency and reduce costs [5][12] Financial Health - Middleby achieved a record operating cash flow of $687 million for the year and reduced net leverage to 2.0 times, indicating improved financial flexibility [8] - The company repurchased $16.4 million in shares, reflecting confidence in its long-term prospects [8] Macroeconomic Context - Macroeconomic challenges, such as reduced restaurant traffic and housing market slowdowns, have impacted certain business segments [9] - The company is taking proactive measures, including focusing on innovation and strategic acquisitions, to counterbalance these external pressures [9] Future Outlook - Management anticipates a positive recovery trajectory, supported by expectations of improved market conditions and sustained demand for innovative products [11] - Continued emphasis on automation and IoT advancements is expected to drive future product development [12]

Core Insights - Middleby (MIDD) reported quarterly earnings of $2.88 per share, exceeding the Zacks Consensus Estimate of $2.50 per share, and showing an increase from $2.65 per share a year ago, resulting in an earnings surprise of 15.20% [1] - The company achieved revenues of $1.01 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.87%, with revenues remaining unchanged compared to the previous year [2] - Middleby shares have increased approximately 24.1% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.7% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.90 on revenues of $933.9 million, while for the current fiscal year, the estimate is $9.61 on revenues of $3.98 billion [7] - The estimate revisions trend for Middleby is mixed, leading to a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Manufacturing - General Industrial industry, to which Middleby belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Another company in the same industry, Chart Industries (GTLS), is expected to report quarterly earnings of $3.19 per share, reflecting a year-over-year increase of 41.8%, with revenues projected at $1.17 billion, up 15.5% from the previous year [9][10]

1400 Toastmaster Drive, Elgin, Illinois 60120 (847) 741-3300 www.middleby.com "We closed 2024 by delivering our strongest margins of the year. Exceptional profitability achievements by our Food Processing and Commercial Foodservice platforms, and a strong result in the residential segment given the depressed market conditions, led us to record cash flow for the year. These results are being delivered while also making critical investments across all our businesses that are uniquely positioning us for the fu ...

The Middleby Corporation (MIDD) has been benefiting from a robust product portfolio and accretive acquisitions. MIDD’s efforts to reward its shareholders add to its appeal.Elgin, IL-based Middleby provides cooking, warming, food preparation and packaging equipment to the commercial, industrial processing and residential markets. Formerly known as Oven Company, it was acquired by TMC Industries Ltd. in 1983.In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 25.4% compared with ...

Middleby (MIDD) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the stock may mo ...