- Revenue of $1,007 million, a 1% increase year over
year
- Diluted Earnings per share of $1.82 and adjusted net
earnings per share of $2.19, an increase of 3% year over
year
- Adjusted EBITDA of $210 million, a 6% increase year over
year
- Profitability grew to an organic adjusted EBITDA margin of
21.1% compared to 19.8% in the prior year
- Completed the acquisition of Flavor Burst, expanding
Middleby’s beverage platform
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 first quarter of 2023.
“We began the year posting solid results at our Commercial
Foodservice and Food Processing segments, while our Residential
business faced the expected challenges of current market conditions
and the impact of inventory destocking at retailers. While these
conditions persist for our residential business, we anticipate
improvement as the year progresses and inventory levels normalize.
Our investments in manufacturing capacities along with improvements
in supply chain have returned lead times to normalized levels
across most of our businesses and position us to serve our
customers in 2023. We continue to have meaningful engagement with
customers across all three of our business segments and are excited
for the opportunities developing around our latest product
innovations addressing labor, energy, speed and sustainability. We
continue to invest in our innovation centers in the US and Europe.
These centers have proven to be a strategic for demonstrating our
new product solutions and driving our long-term growth objectives,”
said Tim FitzGerald, CEO of The Middleby Corporation.
2023 First Quarter Financial
Results
- Net sales increased 1.3% in the first quarter over the
comparative prior year period. Excluding the impacts of
acquisitions and foreign exchange rates, sales decreased 1.4% in
the first quarter over the comparative prior year period.
- Organic net sales (a non-GAAP measure) increases were reported
for the Commercial Foodservice and Food Processing segments due to
improvements in market conditions and consumer demand in the first
quarter of 2023. A reconciliation of reported net sales by segment
is as follows:
Commercial Foodservice
Residential Kitchen
Food Processing
Total Company
Reported Net Sales Growth
13.7
%
(33.6
) %
40.4
%
1.3
%
Acquisitions
3.3
%
—
%
17.3
%
4.0
%
Foreign Exchange Rates
(1.2
)%
(1.6
)%
(1.2
)%
(1.3
)%
Organic Net Sales Growth (1)
(2)
11.5
%
(32.1
)%
24.3
%
(1.4
)%
(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
- Foreign exchange losses were approximately $2.2 million in the
first quarter, which negatively impacted adjusted earnings per
share by $0.03.
- Adjusted EBITDA (a non-GAAP measure) was $210.0 million, in the
first quarter, which includes $2.8 million of unfavorable
translation impacts from changes in foreign exchange rates.
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
26.0
%
12.9
%
23.6
%
20.8
%
Acquisitions
(0.5
) %
—
%
(0.4
) %
(0.3
) %
Foreign Exchange Rates
—
%
—
%
—
%
(0.1
) %
Organic Adjusted EBITDA (1) (2)
26.5
%
12.9
%
24.1
%
21.1
%
(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 first quarter amounted to $92.0
million in comparison to $15.3 million in the prior year period.
The total leverage ratio per our credit agreements was 3.0x. The
trailing twelve month bank agreement pro-forma EBITDA was $894.5
million.
- Repurchased 348,980 Middleby shares in the open market during
the first quarter for $48.3 million.
- Cash balances at the end of the quarter were $156.5 million.
Net debt, defined as debt excluding the unamortized discount
associated with the Convertible Notes less cash, at the end of the
2023 fiscal first quarter amounted to $2.6 billion as compared to
$2.6 billion at the end of fiscal 2022. Additionally, our borrowing
availability at the end of the first quarter was approximately $2.3
billion.
“We are excited to have completed the acquisitions of Flavor
Burst and Blue Sparq to begin the year. Flavor Burst is a terrific
complement to our soft-serve and slush beverage systems, providing
our foodservice customers with an expanded menu of flavorful
offerings to enhance their customers’ experience,” said Tim
FitzGerald. “Blue Sparq extends our software and controls
development capabilities, supporting our accelerated new product
innovation across our portfolio of commercial and residential
brands,” concluded Mr. FitzGerald.
Conference Call
The company has scheduled a conference call to discuss the first
quarter results at 11 a.m. Eastern/10 a.m. Central Time on May
10th. 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 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, the state-of-the-art Middleby Innovation
Kitchens showcases and demonstrates 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
1st Qtr, 2023
1st Qtr, 2022
Net sales
$
1,007,396
$
994,676
Cost of sales
628,661
664,166
Gross profit
378,735
330,510
Selling, general and administrative
expenses
215,407
206,071
Restructuring expenses
2,306
1,875
Income from operations
161,022
122,564
Interest expense and deferred financing
amortization, net
29,462
17,654
Net periodic pension benefit (other than
service costs & curtailment)
(2,251
)
(11,516
)
Other expense, net
1,896
4,061
Earnings before income taxes
131,915
112,365
Provision for income taxes
32,826
26,610
Net earnings
$
99,089
$
85,755
Net earnings per share:
Basic
$
1.85
$
1.57
Diluted
$
1.82
$
1.52
Weighted average number of shares
Basic
53,594
54,669
Diluted
54,377
56,363
THE MIDDLEBY
CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in 000’s)
(Unaudited)
Apr 1, 2023
Dec 31, 2022
ASSETS
Cash and cash equivalents
$
156,524
$
162,001
Accounts receivable, net
652,949
631,134
Inventories, net
1,116,364
1,077,729
Prepaid expenses and other
123,808
125,640
Prepaid taxes
10,874
9,492
Total current assets
2,060,519
2,005,996
Property, plant and equipment, net
461,728
443,528
Goodwill
2,429,167
2,411,834
Other intangibles, net
1,791,062
1,794,232
Long-term deferred tax assets
7,042
6,738
Other assets
206,619
212,538
Total assets
$
6,956,137
$
6,874,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt
$
44,247
$
45,583
Accounts payable
282,032
271,374
Accrued expenses
664,030
671,327
Total current liabilities
990,309
988,284
Long-term debt
2,688,417
2,676,741
Long-term deferred tax liability
218,377
220,204
Accrued pension benefits
11,789
14,948
Other non-current liabilities
185,046
176,942
Stockholders' equity
2,862,199
2,797,747
Total liabilities and stockholders'
equity
$
6,956,137
$
6,874,866
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 April 1,
2023
Net sales
$
613,935
$
219,958
$
173,503
$
1,007,396
Segment Operating Income
$
136,562
$
21,186
$
34,687
$
161,022
Operating Income % of net sales
22.2
%
9.6
%
20.0
%
16.0
%
Depreciation
6,166
3,447
2,097
11,977
Amortization
14,808
2,238
4,137
21,183
Restructuring expenses
893
1,454
(41
)
2,306
Acquisition related adjustments
1,124
—
—
1,124
Charitable support to Ukraine
—
—
—
180
Stock compensation
—
—
—
12,232
Segment adjusted EBITDA (2)
$
159,553
$
28,325
$
40,880
$
210,024
Adjusted EBITDA % of net sales
26.0
%
12.9
%
23.6
%
20.8
%
Three Months Ended April 2,
2022
Net sales
$
540,018
$
331,080
$
123,578
$
994,676
Segment Operating Income
$
109,635
$
24,946
$
20,195
$
122,564
Operating Income % of net sales
20.3
%
7.5
%
16.3
%
12.3
%
Depreciation
5,839
3,985
1,358
11,372
Amortization
13,491
18,129
1,945
33,565
Restructuring expenses
1,451
387
37
1,875
Acquisition related adjustments
20
14,230
—
14,250
Stock compensation
—
—
—
13,723
Segment adjusted EBITDA
$
130,436
$
61,677
$
23,535
$
197,349
Adjusted EBITDA % of net sales
24.2
%
18.6
%
19.0
%
19.8
%
(1) Includes corporate and other general
company expenses, which impact Segment Adjusted EBITDA, and
amounted to $18.7 million and $18.3 million for the three months
ended April 1, 2023 and April 2, 2022, respectively.
(2) Foreign exchange rates negatively
impacted Segment Adjusted EBITDA by approximately $2.8 million for
the three months ended April 1, 2023.
THE MIDDLEBY
CORPORATION
NON-GAAP
INFORMATION (UNAUDITED)
(Amounts in 000’s, Except
Percentages)
Three Months Ended
1st Qtr, 2023
1st Qtr, 2022
$
Diluted per share
$
Diluted per share
Net earnings
$
99,089
$
1.82
$
85,755
$
1.52
Amortization (1)
22,970
0.42
35,370
0.63
Restructuring expenses
2,306
0.04
1,875
0.03
Acquisition related adjustments
1,124
0.02
14,250
0.25
Net periodic pension benefit (other than
service costs & curtailment)
(2,251
)
(0.04
)
(11,516
)
(0.20
)
Charitable support to Ukraine
180
—
—
—
Income tax effect of pre-tax
adjustments
(6,058
)
(0.11
)
(9,475
)
(0.17
)
Adjustment for shares excluded due to
anti-dilution effect on GAAP net earnings (2)
—
0.04
—
0.07
Adjusted net earnings
$
117,360
$
2.19
$
116,259
$
2.13
Diluted weighted average number of
shares
54,377
56,363
Adjustment for shares excluded due to
anti-dilution effect on GAAP net earnings (2)
(781
)
(1,688
)
Adjusted diluted weighted average
number of shares
53,596
54,675
(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
1st Qtr, 2023
1st Qtr, 2022
Net Cash Flows Provided By (Used
In):
Operating activities
$
92,002
$
(15,344
)
Investing activities
(36,450
)
(24,126
)
Financing activities
(63,377
)
8,721
Free Cash Flow
Cash flow from operating activities
$
92,002
$
(15,344
)
Less: Capital expenditures
(25,485
)
(14,497
)
Free cash flow
$
66,517
$
(29,841
)
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/20230510005401/en/
Darcy Bretz, Investor and Public Relations, (847) 429-7756 Bryan
Mittelman, Chief Financial Officer, (847) 429-7715
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