MIDD Middleby Corp

• Net sales of $927 million
• Adjusted EBITDA of $186 million
• Organic adjusted EBITDA margin of 20.1%
• Operating cash flows of $141 million
• Diluted earnings per share of $1.59 and adjusted net earnings per share of $1.89
• Net leverage reduced to 2.4x

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 2024.

“Near-term demand conditions proved to be difficult as we started 2024. We expect improved conditions for the second quarter and remain optimistic for the remainder of the year, as channel inventories have returned to normalized levels and order activity is trending in a positive direction. Our overall profitability remains strong, despite the low order volumes significantly impacting our residential business. We were pleased to again post record cash flows in the quarter, with expected strong cash generation for the entire year,” said Tim FitzGerald, CEO of The Middleby Corporation.

2024 First Quarter Financial Results

• Net sales decreased 8.0% in the first quarter over the comparative prior year period. Excluding the impacts of acquisitions and foreign exchange rates, sales decreased 8.7% in the first 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

(3.8

)%

 

(21.0

)%

 

(6.2

)%

 

(8.0

)%

Acquisitions

0.2

%

 

0.5

%

 

1.0

%

 

0.4

%

Foreign Exchange Rates

0.2

%

 

0.9

%

 

0.4

%

 

0.4

%

Organic Net Sales Growth (1) (2)

(4.2

)%

 

(22.3

)%

 

(7.7

)%

 

(8.7

)%

(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

• Adjusted EBITDA (a non-GAAP measure) was $185.8 million in the first quarter compared to $210.9 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

26.0

%

 

6.4

%

 

23.4

%

 

20.0

%

Acquisitions

(0.1

)%

 

0.1

%

 

(0.4

)%

 

(0.1

)%

Foreign Exchange Rates

(0.1

)%

 

—

%

 

—

%

 

(0.1

)%

Organic Adjusted EBITDA (1) (2)

26.1

%

 

6.3

%

 

23.8

%

 

20.1

%

(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 $140.9 million in comparison to $92.0 million in the prior year period. The total leverage ratio per our credit agreements was 2.4x. The trailing twelve month bank agreement pro-forma EBITDA was $901.3 million.
• Net debt, defined as debt excluding the unamortized discount associated with the Convertible Notes less cash, at the end of the 2024 first quarter amounted to $2.1 billion as compared to $2.2 billion at the end of fiscal 2023. Our borrowing availability at the end of the first quarter was approximately $2.8 billion.

"We are excited to be showcasing many of our latest Commercial Foodservice innovations at the upcoming National Restaurant Show to be held from May 18th through 21st in Chicago. This year we are proud to have a record eight Middleby products receiving the prestigious Kitchen Innovations Award. Our award-winning products include the latest in automation & robotics, beverage dispense, ventless solutions, and advanced cooking & frying technologies. Our recent product launches of industry leading innovations addressing foodservice trends and operator challenges has positioned us to serve the rapidly evolving needs of the foodservice industry,” 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 8th. 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

 

 

1st Qtr, 2024

 

1st Qtr, 2023

Net sales

 

$

926,926

 

 

$

1,007,396

 

Cost of sales

 

 

580,568

 

 

 

628,661

 

 

 

 

 

 

Gross profit

 

 

346,358

 

 

 

378,735

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

206,048

 

 

 

215,407

 

Restructuring expenses

 

 

3,177

 

 

 

2,306

 

Income from operations

 

 

137,133

 

 

 

161,022

 

 

 

 

 

 

Interest expense and deferred financing amortization, net

 

 

26,274

 

 

 

29,462

 

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

 

 

(3,678

)

 

 

(2,251

)

Other (income) expense, net

 

 

(300

)

 

 

1,896

 

 

 

 

 

 

Earnings before income taxes

 

 

114,837

 

 

 

131,915

 

 

 

 

 

 

Provision for income taxes

 

 

28,269

 

 

 

32,826

 

 

 

 

 

 

Net earnings

 

$

86,568

 

 

$

99,089

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.61

 

 

$

1.85

 

 

 

 

 

 

Diluted

 

$

1.59

 

 

$

1.82

 

 

 

 

 

 

Weighted average number of shares

 

 

 

 

 

 

 

 

 

Basic

 

 

53,654

 

 

 

53,594

 

 

 

 

 

 

Diluted

 

 

54,394

 

 

 

54,377

 

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in 000’s)

(Unaudited)

 

 

Mar 30, 2024

 

Dec 30, 2023

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

$

341,018

 

$

247,496

Accounts receivable, net

 

605,180

 

 

644,576

Inventories, net

 

943,679

 

 

935,867

Prepaid expenses and other

 

116,302

 

 

112,690

Prepaid taxes

 

15,744

 

 

25,230

Total current assets

 

2,021,923

 

 

1,965,859

 

 

 

 

Property, plant and equipment, net

 

508,140

 

 

510,898

Goodwill

 

2,473,323

 

 

2,486,310

Other intangibles, net

 

1,669,472

 

 

1,693,076

Long-term deferred tax assets

 

8,033

 

 

7,945

Pension benefits assets

 

42,817

 

 

38,535

Other assets

 

206,697

 

 

204,069

 

 

 

 

Total assets

$

6,930,405

 

$

6,906,692

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current maturities of long-term debt

$

44,543

 

$

44,822

Accounts payable

 

233,432

 

 

227,080

Accrued expenses

 

562,908

 

 

579,192

Total current liabilities

 

840,883

 

 

851,094

 

 

 

 

Long-term debt

 

2,370,107

 

 

2,380,373

Long-term deferred tax liability

 

207,806

 

 

216,143

Accrued pension benefits

 

11,991

 

 

12,128

Other non-current liabilities

 

188,379

 

 

197,065

 

 

 

 

Stockholders' equity

 

3,311,239

 

 

3,249,889

 

 

 

 

Total liabilities and stockholders' equity

$

6,930,405

 

$

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 March 30, 2024

 

 

 

 

 

 

 

Net sales

$

590,344

 

 

$

173,899

 

 

$

162,683

 

 

$

926,926

 

Segment Operating Income

$

131,658

 

 

$

4,537

 

 

$

32,352

 

 

$

137,133

 

Operating Income % of net sales

 

22.3

%

 

 

2.6

%

 

 

19.9

%

 

 

14.8

%

 

 

 

 

 

 

 

 

Depreciation

 

7,021

 

 

 

3,805

 

 

 

2,031

 

 

 

13,273

 

Amortization

 

13,594

 

 

 

1,802

 

 

 

1,954

 

 

 

17,350

 

Restructuring expenses

 

916

 

 

 

922

 

 

 

1,339

 

 

 

3,177

 

Acquisition related adjustments

 

496

 

 

 

136

 

 

 

390

 

 

 

1,022

 

Charitable support to Ukraine

 

—

 

 

 

—

 

 

 

—

 

 

 

8

 

Stock compensation

 

—

 

 

 

—

 

 

 

—

 

 

 

13,822

 

Segment adjusted EBITDA (2)

$

153,685

 

 

$

11,202

 

 

$

38,066

 

 

$

185,785

 

Adjusted EBITDA % of net sales

 

26.0

%

 

 

6.4

%

 

 

23.4

%

 

 

20.0

%

 

 

 

 

 

 

 

 

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

 

1,603

 

 

 

—

 

 

 

436

 

 

 

2,039

 

Charitable support to Ukraine

 

—

 

 

 

—

 

 

 

—

 

 

 

180

 

Stock compensation

 

—

 

 

 

—

 

 

 

—

 

 

 

12,232

 

Segment adjusted EBITDA

$

160,032

 

 

$

28,325

 

 

$

41,316

 

 

$

210,939

 

Adjusted EBITDA % of net sales

 

26.1

%

 

 

12.9

%

 

 

23.8

%

 

 

20.9

%

 

 

 

 

 

 

 

 

(1) Includes corporate and other general company expenses, which impact Segment Adjusted EBITDA, and amounted to $17.2 million and $18.7 million for the three months ended March 30, 2024 and April 1, 2023, respectively.

(2) Foreign exchange rates favorably impacted Segment Adjusted EBITDA by approximately $0.4 million for the three months ended March 30, 2024.

THE MIDDLEBY CORPORATION

NON-GAAP INFORMATION (UNAUDITED)

(Amounts in 000’s, Except Percentages)

 

 

Three Months Ended

 

1st Qtr, 2024

 

1st Qtr, 2023

 

$

 

Diluted per share

 

$

 

Diluted per share

Net earnings

$

86,568

 

 

$

1.59

 

 

$

99,089

 

 

$

1.82

 

Amortization (1)

 

19,137

 

 

 

0.35

 

 

 

22,970

 

 

 

0.42

 

Restructuring expenses

 

3,177

 

 

 

0.06

 

 

 

2,306

 

 

 

0.04

 

Acquisition related adjustments

 

1,022

 

 

 

0.02

 

 

 

2,039

 

 

 

0.04

 

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

 

(3,678

)

 

 

(0.07

)

 

 

(2,251

)

 

 

(0.04

)

Charitable support to Ukraine

 

8

 

 

 

—

 

 

 

180

 

 

 

—

 

Income tax effect of pre-tax adjustments

 

(4,838

)

 

 

(0.09

)

 

 

(6,286

)

 

 

(0.12

)

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

 

—

 

 

 

0.03

 

 

 

—

 

 

 

0.04

 

Adjusted net earnings

$

101,396

 

 

$

1.89

 

 

$

118,047

 

 

$

2.20

 

 

 

 

 

 

 

 

 

Diluted weighted average number of shares

 

54,394

 

 

 

 

 

54,377

 

 

 

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

 

(737

)

 

 

 

 

(781

)

 

 

Adjusted diluted weighted average number of shares

 

53,657

 

 

 

 

 

53,596

 

 

 

 

 

 

 

 

 

 

 

(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, 2024

 

1st Qtr, 2023

Net Cash Flows Provided By (Used In):

 

 

 

 

Operating activities

 

$

140,901

 

 

$

92,002

 

Investing activities

 

 

(16,089

)

 

 

(36,450

)

Financing activities

 

 

(28,558

)

 

 

(63,377

)

 

 

 

 

 

Free Cash Flow

 

 

 

 

Cash flow from operating activities

 

$

140,901

 

 

$

92,002

 

Less: Capital expenditures

 

 

(13,743

)

 

 

(25,485

)

Free cash flow

 

$

127,158

 

 

$

66,517

 

 

 

 

 

 

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/20240508158552/en/

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