Middleby(US:MIDD)2025-02-26 21:48Financial 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].