- Revenue of $1,040 million, a 3% increase year over
year
- Diluted Earnings per share of $2.16 and adjusted net
earnings per share of $2.47, an increase of 11% year over
year
- Adjusted EBITDA of $229 million, a 9% increase year over
year
- Profitability grew to an organic adjusted EBITDA margin of
22.0% compared to 20.7% in the prior year
- Completed the acquisitions of Blue Sparq and Filtration
Automation
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 2023.
“We delivered solid results with top line growth and margin
expansion at our Commercial Foodservice and Food Processing
segments. We continue to execute toward our long-term growth and
profitability targets at our Residential business, while managing
the near-term headwinds from challenging housing market conditions.
Inventory de-stocking affected the quarter at both our Commercial
and Residential businesses and is expected to continue into the
second half, with a lessening impact in the later part of the year.
We continue to see strong underlying demand and a robust pipeline
of new opportunities with our Commercial Foodservice and Food
Processing customers adopting our latest innovations. Early signs
of improvement in certain Residential categories are emerging as
market conditions begin to stabilize and we are well-positioned for
growth with the many exciting new products across our brand
portfolio as the market returns,” said Tim FitzGerald, CEO of The
Middleby Corporation.
2023 Second Quarter Financial
Results
- Net sales increased 2.6% in the second quarter over the
comparative prior year period. Excluding the impacts of
acquisitions and foreign exchange rates, sales decreased 2.3% in
the second 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 in the
second 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
6.5
%
(26.6
)%
48.2
%
2.6
%
Acquisitions
3.8
%
—
%
21.0
%
4.9
%
Foreign Exchange Rates
(0.2
)%
0.2
%
0.5
%
—
%
Organic Net Sales Growth (1)
(2)
2.9
%
(26.8
)%
26.7
%
(2.3
)%
(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 $228.7 million in the
second quarter compared to $210.2 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
27.7
%
13.9
%
21.9
%
22.0
%
Acquisitions
(0.3
)%
—
%
0.2
%
—
%
Foreign Exchange Rates
—
%
0.1
%
—
%
—
%
Organic Adjusted EBITDA (1) (2)
28.1
%
13.8
%
21.7
%
22.0
%
(1) Organic Adjusted EBITDA defined as
Adjusted EBITDA excluding impact of acquisitions and foreign
exchange rates.
(2) Totals may be impacted by rounding
- Foreign exchange losses were approximately $1.3 million in the
second quarter, which negatively impacted adjusted earnings per
share by $0.02.
- Operating cash flows for the first half of the year amounted to
$154.0 million in comparison to $89.5 million in the prior year
period. Capital Expenditures for the first six months amount to
$48.3 million supporting critical strategic investments driving
operating efficiencies, new product launches and growth
initiatives.
- Net debt, defined as debt excluding the unamortized discount
associated with the Convertible Notes less cash, at the end of the
2023 fiscal second quarter and at the end of fiscal 2022 amounted
to $2.6 billion. Our borrowing availability at the end of the
second quarter was approximately $2.3 billion.
- The total leverage ratio per our credit agreements was 2.9x.
The trailing twelve month bank agreement pro-forma EBITDA was
$911.3 million.
"We are excited to have recently completed the acquisitions of
Blue Sparq, Filtration Automation and Trade-Wind, further extending
complementary product offerings and innovations across our three
foodservice segments,” said Mr. FitzGerald. “Blue Sparq
significantly enhances our software development capabilities and
provides us with controls manufacturing as we accelerate our
digital product strategy. We are excited with the many customer
opportunities across our brand portfolio that Blue Sparq has
immediately engaged, accelerating our pace of innovation and launch
to market. The Filtration Automation patented oil filtration
systems provide for significant reduction in operating costs and
improved food quality. This oil filtration system complements our
existing frying equipment offering and enables us to bring to
market an industry leading integrated customer solution.” Mr.
FitzGerald continued, “We are pleased to have also completed the
acquisition of Trade-Wind, a leader in the design of custom
ventilation for the residential market. We have been partnered with
Trade-Wind in developing complementary customer offerings with many
of our cooking brands over the past year. This addition allows us
to seamlessly work together as we launch exciting new designs into
the marketplace,” concluded Mr. FitzGerald.
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 3rd. 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, state-of-the-art Middleby Innovation
Kitchens and Residential Showrooms showcase 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
Six Months Ended
2nd Qtr, 2023
2nd Qtr, 2022
2nd Qtr, 2023
2nd Qtr, 2022
Net sales
$
1,039,982
$
1,013,601
$
2,047,378
$
2,008,277
Cost of sales
646,746
652,859
1,275,407
1,317,025
Gross profit
393,236
360,742
771,971
691,252
Selling, general and administrative
expenses
203,521
189,486
418,928
395,557
Restructuring expenses
4,944
4,029
7,250
5,904
Income from operations
184,771
167,227
345,793
289,791
Interest expense and deferred financing
amortization, net
31,529
20,842
60,991
38,496
Net periodic pension benefit (other than
service costs & curtailment)
(2,575
)
(10,784
)
(4,826
)
(22,300
)
Other (income) expense, net
(326
)
5,888
1,570
9,949
Earnings before income taxes
156,143
151,281
288,058
263,646
Provision for income taxes
39,293
38,033
72,119
64,643
Net earnings
$
116,850
$
113,248
$
215,939
$
199,003
Net earnings per share:
Basic
$
2.18
$
2.10
$
4.03
$
3.66
Diluted
$
2.16
$
2.07
$
3.98
$
3.59
Weighted average number of shares
Basic
53,527
54,033
53,560
54,351
Diluted
54,042
54,654
54,209
55,509
THE MIDDLEBY
CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in 000’s)
(Unaudited)
Jul 1, 2023
Dec 31, 2022
ASSETS
Cash and cash equivalents
$
157,279
$
162,001
Accounts receivable, net
643,405
631,134
Inventories, net
1,082,523
1,077,729
Prepaid expenses and other
132,030
125,640
Prepaid taxes
20,967
9,492
Total current assets
2,036,204
2,005,996
Property, plant and equipment, net
483,064
443,528
Goodwill
2,451,866
2,411,834
Other intangibles, net
1,790,771
1,794,232
Long-term deferred tax assets
8,280
6,738
Other assets
214,573
212,538
Total assets
$
6,984,758
$
6,874,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt
$
44,250
$
45,583
Accounts payable
232,740
271,374
Accrued expenses
601,415
671,327
Total current liabilities
878,405
988,284
Long-term debt
2,687,544
2,676,741
Long-term deferred tax liability
216,220
220,204
Accrued pension benefits
8,482
14,948
Other non-current liabilities
194,581
176,942
Stockholders' equity
2,999,526
2,797,747
Total liabilities and stockholders'
equity
$
6,984,758
$
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 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
(327
)
—
51
(276
)
Charitable support to Ukraine
—
—
—
309
Stock compensation
—
—
—
9,898
Segment adjusted EBITDA (2)
$
178,920
$
28,522
$
41,354
$
228,689
Adjusted EBITDA % of net sales
27.7
%
13.9
%
21.9
%
22.0
%
Three Months Ended July 2, 2022
Net sales
$
606,274
$
280,009
$
127,318
$
1,013,601
Segment Operating Income
$
137,584
$
46,077
$
18,308
$
167,227
Operating Income % of net sales
22.7
%
16.5
%
14.4
%
16.5
%
Depreciation
5,817
3,425
1,332
10,757
Amortization
13,553
1,030
1,905
16,488
Restructuring expenses
820
611
2,598
4,029
Acquisition related adjustments
(3,112
)
832
—
(2,280
)
Charitable support to Ukraine
—
—
—
798
Stock compensation
—
—
—
13,157
Segment adjusted EBITDA
$
154,662
$
51,975
$
24,143
$
210,176
Adjusted EBITDA % of net sales
25.5
%
18.6
%
19.0
%
20.7
%
(1) Includes corporate and other general
company expenses, which impact Segment Adjusted EBITDA, and
amounted to $20.1 million and $20.6 million for the three months
ended July 1, 2023 and July 2, 2022, respectively.
(2) Foreign exchange rates negatively
impacted Segment Adjusted EBITDA by approximately $0.1 million for
the three months ended July 1, 2023.
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 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
797
—
51
848
Charitable support to Ukraine
—
—
—
489
Stock compensation
—
—
—
22,130
Segment adjusted EBITDA (2)
$
338,473
$
56,847
$
82,234
$
438,713
Adjusted EBITDA % of net sales
26.9
%
13.4
%
22.7
%
21.4
%
Six Months Ended July 2, 2022
Net sales
$
1,146,292
$
611,089
$
250,896
$
2,008,277
Segment Operating Income
$
247,219
$
71,023
$
38,503
$
289,791
Operating Income % of net sales
21.6
%
11.6
%
15.3
%
14.4
%
Depreciation
11,656
7,410
2,690
22,129
Amortization
27,044
19,159
3,850
50,053
Restructuring expenses
2,271
998
2,635
5,904
Acquisition related adjustments
(3,092
)
15,062
—
11,970
Charitable support to Ukraine
—
—
—
798
Stock compensation
—
—
—
26,880
Segment adjusted EBITDA
$
285,098
$
113,652
$
47,678
$
407,525
Adjusted EBITDA % of net sales
24.9
%
18.6
%
19.0
%
20.3
%
(1) Includes corporate and other general
company expenses, which impact Segment Adjusted EBITDA, and
amounted to $38.8 million and $38.9 million for the six months
ended July 1, 2023 and July 2, 2022, respectively.
(2) Foreign exchange rates negatively
impacted Segment Adjusted EBITDA by approximately $3.0 million for
the six months ended July 1, 2023.
THE MIDDLEBY
CORPORATION
NON-GAAP
INFORMATION (UNAUDITED)
(Amounts in 000’s, Except
Percentages)
Three Months Ended
2nd Qtr, 2023
2nd Qtr, 2022
$
Diluted per share
$
Diluted per share
Net earnings
$
116,850
$
2.16
$
113,248
$
2.07
Amortization (1)
18,307
0.34
18,279
0.33
Restructuring expenses
4,944
0.09
4,029
0.07
Acquisition related adjustments
(276
)
(0.01
)
(2,280
)
(0.04
)
Net periodic pension benefit (other than
service costs & curtailment)
(2,575
)
(0.05
)
(10,784
)
(0.20
)
Charitable support to Ukraine
309
0.01
798
0.01
Income tax effect of pre-tax
adjustments
(5,219
)
(0.10
)
(2,521
)
(0.05
)
Adjustment for shares excluded due to
anti-dilution effect on GAAP net earnings (2)
—
0.03
—
0.04
Adjusted net earnings
$
132,340
$
2.47
$
120,769
$
2.23
Diluted weighted average number of
shares
54,042
54,654
Adjustment for shares excluded due to
anti-dilution effect on GAAP net earnings (2)
(510
)
(613
)
Adjusted diluted weighted average
number of shares
53,532
54,041
Six Months Ended
2nd Qtr, 2023
2nd Qtr, 2022
$
Diluted per share
$
Diluted per share
Net earnings
$
215,939
$
3.98
$
199,003
$
3.59
Amortization (1)
41,277
0.76
53,649
0.97
Restructuring expenses
7,250
0.13
5,904
0.11
Acquisition related adjustments
848
0.02
11,970
0.22
Net periodic pension benefit (other than
service costs & curtailment)
(4,826
)
(0.09
)
(22,300
)
(0.40
)
Charitable support to Ukraine
489
0.01
798
0.01
Income tax effect of pre-tax
adjustments
(11,260
)
(0.21
)
(12,255
)
(0.22
)
Adjustment for shares excluded due to
anti-dilution effect on GAAP net earnings (2)
—
0.06
—
0.08
Adjusted net earnings
$
249,717
$
4.66
$
236,769
$
4.36
Diluted weighted average number of
shares
54,209
55,509
Adjustment for shares excluded due to
anti-dilution effect on GAAP net earnings (2)
(645
)
(1,151
)
Adjusted diluted weighted average
number of shares
53,564
54,358
(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, 2023
2nd Qtr, 2022
2nd Qtr, 2023
2nd Qtr, 2022
Net Cash Flows Provided By (Used
In):
Operating activities
$
61,948
$
104,802
$
153,950
$
89,458
Investing activities
(48,816
)
(83,133
)
(85,266
)
(107,259
)
Financing activities
(11,858
)
9,017
(75,235
)
17,738
Free Cash Flow
Cash flow from operating activities
$
61,948
$
104,802
$
153,950
$
89,458
Less: Capital expenditures
(22,830
)
(17,636
)
(48,315
)
(32,133
)
Free cash flow
$
39,118
$
87,166
$
105,635
$
57,325
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/20230803555812/en/
Darcy Bretz, Investor and Public Relations, (847) 429-7756 Bryan
Mittelman, Chief Financial Officer, (847) 429-7715
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