MIDD Middleby Corp

• Net sales of $992 million
• Diluted earnings per share of $2.13 and adjusted net earnings per share of $2.39
• Operating income of $176 million and 17.7% of net sales
• Adjusted EBITDA of $216 million and organic adjusted EBITDA margin of 21.8%
• Operating cash flows of $150 million
• Net leverage reduced to 2.3x

The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of equipment for the commercial foodservice, food processing, and residential kitchen industries, today reported net earnings for the second quarter of 2024.

“We continue to make progress toward our longer-term financial goals, posting strong profitability and record operating cash flows in the quarter. Orders trended positively during the quarter, with increases at all three of our segments as compared to the prior year second quarter. Although general market conditions are challenged, we are positioned for growth in the second half as we continue to execute on our strategic initiatives. Our launches of new product innovations and investments in go-to-market strategies continue to strengthen our leadership position across our three foodservice businesses,” said Tim FitzGerald, CEO of The Middleby Corporation.

2024 Second Quarter Financial Results

• Net sales decreased 4.7% in the second quarter over the comparative prior year period. Excluding the impacts of acquisitions and foreign exchange rates, sales decreased 4.8% in the second quarter over the comparative prior year period.

• A reconciliation of organic net sales (a non-GAAP measure) by segment is as follows:

 

Commercial Foodservice

 

Residential Kitchen

 

Food Processing

 

Total Company

Reported Net Sales Growth

(4.1) %

 

(6.2) %

 

(4.9) %

 

(4.7) %

Acquisitions

0.1 %

 

0.5 %

 

1.0 %

 

0.3 %

Foreign Exchange Rates

(0.2) %

 

— %

 

(0.3) %

 

(0.2) %

Organic Net Sales Growth (1) (2)

(3.9) %

 

(6.7) %

 

(5.7) %

 

(4.8) %

(1) Organic net sales growth defined as total sales growth excluding impact of acquisitions and foreign exchange rates

(2) Totals may be impacted by rounding

• Operating income was $175.7 million in the second quarter compared to $184.8 million in the prior year period.

• Adjusted EBITDA (a non-GAAP measure) was $216.4 million in the second quarter compared to $229.2 million in the prior year. A reconciliation of organic adjusted EBITDA (a non-GAAP measure) by segment is as follows:

 

Commercial Foodservice

 

Residential Kitchen

 

Food Processing

 

Total Company

Adjusted EBITDA

28.1 %

 

9.1 %

 

24.0 %

 

21.8 %

Acquisitions

— %

 

0.1 %

 

(0.1) %

 

— %

Foreign Exchange Rates

— %

 

— %

 

— %

 

— %

Organic Adjusted EBITDA (1) (2)

28.1 %

 

9.0 %

 

24.1 %

 

21.8 %

(1) Organic Adjusted EBITDA defined as Adjusted EBITDA excluding impact of acquisitions and foreign exchange rates.

(2) Totals may be impacted by rounding

• Operating cash flows during the second quarter amounted to $149.5 million in comparison to $61.9 million in the prior year period. The total leverage ratio per our credit agreements was 2.3x. The trailing twelve month bank agreement pro-forma EBITDA was $890.3 million.

• Net debt, defined as debt excluding the unamortized discount associated with the Convertible Notes less cash, at the end of the 2024 fiscal second quarter amounted to $2.0 billion as compared to $2.2 billion at the end of fiscal 2023. Our borrowing availability at the end of the second quarter was approximately $2.9 billion.

Conference Call

The company has scheduled a conference call to discuss the second quarter results at 11 a.m. Eastern/10 a.m. Central Time on August 1st. The conference call is accessible through the Investor Relations section of the company website at www.middleby.com. If website access is not available, attendees can join the conference by dialing (833) 630-1956, or (412) 317-1837 for international access, and ask to join the Middleby conference call. The conference call will be available for replay from the company’s website.

Statements in this press release or otherwise attributable to the company regarding the company's business which are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cautions investors that such statements are estimates of future performance and are highly dependent upon a variety of important factors that could cause actual results to differ materially from such statements. Such factors include variability in financing costs; quarterly variations in operating results; dependence on key customers; international exposure; foreign exchange and political risks affecting international sales; changing market conditions; the impact of competitive products and pricing; the timely development and market acceptance of the company's products; the availability and cost of raw materials; and other risks detailed herein and from time-to-time in the company's SEC filings. Any forward-looking statement speaks only as of the date hereof, and the company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

The Middleby Corporation is a global leader in the foodservice industry. The company develops and manufactures a broad line of solutions used in commercial foodservice, food processing, and residential kitchens. Supporting the company’s pursuit of the most sophisticated innovation, state-of-the-art Middleby Innovation Kitchens and Residential Showrooms showcase and demonstrate the most advanced Middleby solutions. In 2022 Middleby was named a World’s Best Employer by Forbes and is a proud philanthropic partner to organizations addressing food insecurity.

 

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Amounts in 000’s, Except Per Share Information)

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

2nd Qtr, 2024

 

2nd Qtr, 2023

 

2nd Qtr, 2024

 

2nd Qtr, 2023

Net sales

$

991,546

 

 

$

1,039,982

 

 

$

1,918,472

 

 

$

2,047,378

 

Cost of sales

 

611,904

 

 

 

646,746

 

 

 

1,192,472

 

 

 

1,275,407

 

 

 

 

 

 

 

 

 

Gross profit

 

379,642

 

 

 

393,236

 

 

 

726,000

 

 

 

771,971

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

198,584

 

 

 

203,521

 

 

 

404,632

 

 

 

418,928

 

Restructuring expenses

 

5,350

 

 

 

4,944

 

 

 

8,527

 

 

 

7,250

 

Income from operations

 

175,708

 

 

 

184,771

 

 

 

312,841

 

 

 

345,793

 

 

 

 

 

 

 

 

 

Interest expense and deferred financing amortization, net

 

24,566

 

 

 

31,529

 

 

 

50,840

 

 

 

60,991

 

Net periodic pension benefit (other than service costs & curtailment)

 

(3,690

)

 

 

(2,575

)

 

 

(7,368

)

 

 

(4,826

)

Other expense (income), net

 

56

 

 

 

(326

)

 

 

(244

)

 

 

1,570

 

 

 

 

 

 

 

 

 

Earnings before income taxes

 

154,776

 

 

 

156,143

 

 

 

269,613

 

 

 

288,058

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

39,381

 

 

 

39,293

 

 

 

67,650

 

 

 

72,119

 

 

 

 

 

 

 

 

 

Net earnings

$

115,395

 

 

$

116,850

 

 

$

201,963

 

 

$

215,939

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.15

 

 

$

2.18

 

 

$

3.76

 

 

$

4.03

 

 

 

 

 

 

 

 

 

Diluted

$

2.13

 

 

$

2.16

 

 

$

3.72

 

 

$

3.98

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

53,765

 

 

 

53,527

 

 

 

53,710

 

 

 

53,560

 

 

 

 

 

 

 

 

 

Diluted

 

54,072

 

 

 

54,042

 

 

 

54,233

 

 

 

54,209

 

 

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in 000’s)

(Unaudited)

 

 

Jun 29, 2024

 

Dec 30, 2023

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

$

459,457

 

$

247,496

Accounts receivable, net

 

624,622

 

 

644,576

Inventories, net

 

920,096

 

 

935,867

Prepaid expenses and other

 

125,656

 

 

112,690

Prepaid taxes

 

13,508

 

 

25,230

Total current assets

 

2,143,339

 

 

1,965,859

 

 

 

 

Property, plant and equipment, net

 

504,661

 

 

510,898

Goodwill

 

2,471,721

 

 

2,486,310

Other intangibles, net

 

1,650,965

 

 

1,693,076

Long-term deferred tax assets

 

6,814

 

 

7,945

Pension benefits assets

 

47,343

 

 

38,535

Other assets

 

200,940

 

 

204,069

 

 

 

 

Total assets

$

7,025,783

 

$

6,906,692

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current maturities of long-term debt

$

44,250

 

$

44,822

Accounts payable

 

238,733

 

 

227,080

Accrued expenses

 

573,880

 

 

579,192

Total current liabilities

 

856,863

 

 

851,094

 

 

 

 

Long-term debt

 

2,359,996

 

 

2,380,373

Long-term deferred tax liability

 

193,512

 

 

216,143

Accrued pension benefits

 

11,841

 

 

12,128

Other non-current liabilities

 

181,660

 

 

197,065

 

 

 

 

Stockholders' equity

 

3,421,911

 

 

3,249,889

 

 

 

 

Total liabilities and stockholders' equity

$

7,025,783

 

$

6,906,692

 

THE MIDDLEBY CORPORATION

NON-GAAP SEGMENT INFORMATION (UNAUDITED)

(Amounts in 000’s, Except Percentages)

 

 

 

 

 

 

 

 

 

Commercial Foodservice

 

Residential Kitchen

 

Food Processing

 

Total Company (1)

Three Months Ended June 29, 2024

 

 

 

 

 

 

 

Net sales

$

619,379

 

 

$

192,763

 

 

$

179,404

 

 

$

991,546

 

Segment Operating Income

$

151,713

 

 

$

10,132

 

 

$

40,484

 

 

$

175,708

 

Operating Income % of net sales

 

24.5

%

 

 

5.3

%

 

 

22.6

%

 

 

17.7

%

 

 

 

 

 

 

 

 

Depreciation

 

6,906

 

 

 

3,969

 

 

 

2,276

 

 

 

13,581

 

Amortization

 

12,729

 

 

 

1,799

 

 

 

1,760

 

 

 

16,288

 

Restructuring expenses

 

2,686

 

 

 

1,953

 

 

 

711

 

 

 

5,350

 

Acquisition related adjustments

 

191

 

 

 

(349

)

 

 

(2,197

)

 

 

(2,355

)

Charitable support to Ukraine

 

—

 

 

 

—

 

 

 

—

 

 

 

168

 

Stock compensation

 

—

 

 

 

—

 

 

 

—

 

 

 

7,648

 

Segment adjusted EBITDA (2)

$

174,225

 

 

$

17,504

 

 

$

43,034

 

 

$

216,388

 

Adjusted EBITDA % of net sales

 

28.1

%

 

 

9.1

%

 

 

24.0

%

 

 

21.8

%

 

 

 

 

 

 

 

 

Three Months Ended July 1, 2023

 

 

 

 

 

 

 

Net sales

$

645,663

 

 

$

205,571

 

 

$

188,748

 

 

$

1,039,982

 

Segment Operating Income

$

156,969

 

 

$

19,096

 

 

$

39,324

 

 

$

184,771

 

Operating Income % of net sales

 

24.3

%

 

 

9.3

%

 

 

20.8

%

 

 

17.8

%

 

 

 

 

 

 

 

 

Depreciation

 

7,011

 

 

 

3,319

 

 

 

1,889

 

 

 

12,523

 

Amortization

 

14,138

 

 

 

2,250

 

 

 

132

 

 

 

16,520

 

Restructuring expenses

 

1,129

 

 

 

3,857

 

 

 

(42

)

 

 

4,944

 

Acquisition related adjustments

 

130

 

 

 

(293

)

 

 

370

 

 

 

207

 

Charitable support to Ukraine

 

—

 

 

 

—

 

 

 

—

 

 

 

309

 

Stock compensation

 

—

 

 

 

—

 

 

 

—

 

 

 

9,898

 

Segment adjusted EBITDA

$

179,377

 

 

$

28,229

 

 

$

41,673

 

 

$

229,172

 

Adjusted EBITDA % of net sales

 

27.8

%

 

 

13.7

%

 

 

22.1

%

 

 

22.0

%

 

 

 

 

 

 

 

 

(1) Includes corporate and other general company expenses, which impact Segment Adjusted EBITDA, and amounted to $18.4 million and $20.1 million for the three months ended June 29, 2024 and July 1, 2023, respectively.

(2) Foreign exchange rates unfavorably impacted Segment Adjusted EBITDA by approximately $0.5 million for the three months ended June 29, 2024.

 

THE MIDDLEBY CORPORATION

NON-GAAP SEGMENT INFORMATION (UNAUDITED)

(Amounts in 000’s, Except Percentages)

 

 

 

 

 

 

 

 

 

Commercial Foodservice

 

Residential Kitchen

 

Food Processing

 

Total Company (1)

Six Months Ended June 29, 2024

 

 

 

 

 

 

 

Net sales

$

1,209,723

 

 

$

366,662

 

 

$

342,087

 

 

$

1,918,472

 

Segment Operating Income

$

283,371

 

 

$

14,669

 

 

$

72,837

 

 

$

312,841

 

Operating Income % of net sales

 

23.4

%

 

 

4.0

%

 

 

21.3

%

 

 

16.3

%

 

 

 

 

 

 

 

 

Depreciation

 

13,928

 

 

 

7,774

 

 

 

4,306

 

 

 

26,854

 

Amortization

 

26,323

 

 

 

3,601

 

 

 

3,714

 

 

 

33,638

 

Restructuring expenses

 

3,602

 

 

 

2,875

 

 

 

2,050

 

 

 

8,527

 

Acquisition related adjustments

 

686

 

 

 

(213

)

 

 

(1,806

)

 

 

(1,333

)

Charitable support to Ukraine

 

—

 

 

 

—

 

 

 

—

 

 

 

176

 

Stock compensation

 

—

 

 

 

—

 

 

 

—

 

 

 

21,470

 

Segment adjusted EBITDA (2)

$

327,910

 

 

$

28,706

 

 

$

81,101

 

 

$

402,173

 

Adjusted EBITDA % of net sales

 

27.1

%

 

 

7.8

%

 

 

23.7

%

 

 

21.0

%

 

 

 

 

 

 

 

 

Six Months Ended July 1, 2023

 

 

 

 

 

 

 

Net sales

$

1,259,598

 

 

$

425,529

 

 

$

362,251

 

 

$

2,047,378

 

Segment Operating Income

$

293,531

 

 

$

40,282

 

 

$

74,011

 

 

$

345,793

 

Operating Income % of net sales

 

23.3

%

 

 

9.5

%

 

 

20.4

%

 

 

16.9

%

 

 

 

 

 

 

 

 

Depreciation

 

13,177

 

 

 

6,766

 

 

 

3,986

 

 

 

24,500

 

Amortization

 

28,946

 

 

 

4,488

 

 

 

4,269

 

 

 

37,703

 

Restructuring expenses

 

2,022

 

 

 

5,311

 

 

 

(83

)

 

 

7,250

 

Acquisition related adjustments

 

1,733

 

 

 

(294

)

 

 

807

 

 

 

2,246

 

Charitable support to Ukraine

 

—

 

 

 

—

 

 

 

—

 

 

 

489

 

Stock compensation

 

—

 

 

 

—

 

 

 

—

 

 

 

22,130

 

Segment adjusted EBITDA

$

339,409

 

 

$

56,553

 

 

$

82,990

 

 

$

440,111

 

Adjusted EBITDA % of net sales

 

26.9

%

 

 

13.3

%

 

 

22.9

%

 

 

21.5

%

 

 

 

 

 

 

 

 

(1) Includes corporate and other general company expenses, which impact Segment Adjusted EBITDA, and amounted to $35.5 million and $38.8 million for the six months ended June 29, 2024 and July 1, 2023, respectively.

 

(2) Foreign exchange rates unfavorably impacted Segment Adjusted EBITDA by $0.1 million for the six months ended June 29, 2024.

 

THE MIDDLEBY CORPORATION

NON-GAAP INFORMATION (UNAUDITED)

(Amounts in 000’s, Except Percentages)

 

 

Three Months Ended

 

2nd Qtr, 2024

 

2nd Qtr, 2023

 

$

 

Diluted per share

 

$

 

Diluted per share

Net earnings

$

115,395

 

 

$

2.13

 

 

$

116,850

 

 

$

2.16

 

Amortization (1)

 

18,066

 

 

 

0.33

 

 

 

18,307

 

 

 

0.34

 

Restructuring expenses

 

5,350

 

 

 

0.10

 

 

 

4,944

 

 

 

0.09

 

Acquisition related adjustments

 

(2,355

)

 

 

(0.04

)

 

 

207

 

 

 

—

 

Net periodic pension benefit (other than service costs & curtailment)

 

(3,690

)

 

 

(0.07

)

 

 

(2,575

)

 

 

(0.05

)

Charitable support to Ukraine

 

168

 

 

 

—

 

 

 

309

 

 

 

0.01

 

Income tax effect of pre-tax adjustments

 

(4,455

)

 

 

(0.08

)

 

 

(5,340

)

 

 

(0.10

)

Adjustment for shares excluded due to anti-dilution effect on GAAP net earnings (2)

 

—

 

 

 

0.02

 

 

 

—

 

 

 

0.03

 

Adjusted net earnings

$

128,479

 

 

$

2.39

 

 

$

132,702

 

 

$

2.48

 

 

 

 

 

 

 

 

 

Diluted weighted average number of shares

 

54,072

 

 

 

 

 

54,042

 

 

 

Adjustment for shares excluded due to anti-dilution effect on GAAP net earnings (2)

 

(300

)

 

 

 

 

(510

)

 

 

Adjusted diluted weighted average number of shares

 

53,772

 

 

 

 

 

53,532

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

2nd Qtr, 2024

 

2nd Qtr, 2023

 

$

 

Diluted per share

 

$

 

Diluted per share

Net earnings

$

201,963

 

 

$

3.72

 

 

$

215,939

 

 

$

3.98

 

Amortization (1)

 

37,202

 

 

 

0.69

 

 

 

41,277

 

 

 

0.76

 

Restructuring expenses

 

8,527

 

 

 

0.16

 

 

 

7,250

 

 

 

0.13

 

Acquisition related adjustments

 

(1,333

)

 

 

(0.02

)

 

 

2,246

 

 

 

0.04

 

Net periodic pension benefit (other than service costs & curtailment)

 

(7,368

)

 

 

(0.14

)

 

 

(4,826

)

 

 

(0.09

)

Charitable support to Ukraine

 

176

 

 

 

—

 

 

 

489

 

 

 

0.01

 

Income tax effect of pre-tax adjustments

 

(9,338

)

 

 

(0.17

)

 

 

(11,609

)

 

 

(0.21

)

Adjustment for shares excluded due to anti-dilution effect on GAAP net earnings (2)

 

—

 

 

 

0.04

 

 

 

—

 

 

 

0.06

 

Adjusted net earnings

$

229,829

 

 

$

4.28

 

 

$

250,766

 

 

$

4.68

 

 

 

 

 

 

 

 

 

Diluted weighted average number of shares

 

54,233

 

 

 

 

 

54,209

 

 

 

Adjustment for shares excluded due to anti-dilution effect on GAAP net earnings (2)

 

(519

)

 

 

 

 

(645

)

 

 

Adjusted diluted weighted average number of shares

 

53,714

 

 

 

 

 

53,564

 

 

 

 

(1) Includes amortization of deferred financing costs and convertible notes issuance costs.

(2) Adjusted diluted weighted average number of shares was calculated based on excluding the dilutive effect of shares to be issued upon conversion of the notes to satisfy the amount in excess of the principal since the company's capped call offsets the dilutive impact of the shares underlying the convertible notes. The calculation of adjusted diluted earnings per share excludes the principal portion of the convertible notes as this will always be settled in cash.

 

Three Months Ended

 

Six Months Ended

 

2nd Qtr, 2024

 

2nd Qtr, 2023

 

2nd Qtr, 2024

 

2nd Qtr, 2023

Net Cash Flows Provided By (Used In):

 

 

 

 

 

 

 

Operating activities

$

149,516

 

 

$

61,948

 

 

$

290,417

 

 

$

153,950

 

Investing activities

 

(14,228

)

 

 

(48,816

)

 

 

(30,317

)

 

 

(85,266

)

Financing activities

 

(14,117

)

 

 

(11,858

)

 

 

(42,675

)

 

 

(75,235

)

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

Cash flow from operating activities

$

149,516

 

 

$

61,948

 

 

$

290,417

 

 

$

153,950

 

Less: Capital expenditures

 

(10,937

)

 

 

(22,830

)

 

 

(24,680

)

 

 

(48,315

)

Free cash flow

$

138,579

 

 

$

39,118

 

 

$

265,737

 

 

$

105,635

 

 

 

 

 

 

 

 

 

USE OF NON-GAAP FINANCIAL MEASURES

The company supplements its consolidated financial statements presented on a GAAP basis with this non-GAAP financial information to provide investors with greater insight, increase transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated. In addition, the non-GAAP financial measures included in this press release do not have standard meanings and may vary from similarly titled non-GAAP financial measures used by other companies.

The company believes that organic net sales growth, non-GAAP adjusted segment EBITDA, adjusted net earnings and adjusted diluted per share measures are useful as supplements to its GAAP results of operations to evaluate certain aspects of its operations and financial performance, and its management team primarily focuses on non-GAAP items in evaluating performance for business planning purposes. The company also believes that these measures assist it with comparing its performance between various reporting periods on a consistent basis, as these measures remove from operating results the impact of items that, in its opinion, do not reflect its core operating performance including, for example, intangibles amortization expense, impairment charges, restructuring expenses, and other charges which management considers to be outside core operating results.

The company believes that free cash flow is an important measure of operating performance because it provides management and investors a measure of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, repaying debt and repurchasing our common stock.

The company believes that its presentation of these non-GAAP financial measures is useful because it provides investors and securities analysts with the same information that Middleby uses internally for purposes of assessing its core operating performance.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801130533/en/

John Joyner, VP of Investor Relations, jjoyner@middleby.com