Middleby(US:MIDD)2025-05-07 11:01First Quarter 2025 Results Overview Key Announcements & Financial Highlights The Middleby Corporation reported its first-quarter 2025 results, announcing an accelerated share repurchase program funded by free cash flow, alongside plans to separate its Food Processing business by early 2026, and a significant increase in share buyback authorization to 11.4 million shares, representing 21% of equity - Announced the planned separation of its Food Processing business into a separate public company, expected to be completed in early 20261 - The company will accelerate its share repurchase program, intending to use the vast majority of its free cash flow for buybacks13 - The Board of Directors increased the total share repurchase authorization by 7.5 million shares, bringing the total to 11.4 million shares, or 21% of the company's outstanding equity3 Strategic & Operational Updates Share Repurchasing Program The company prioritizes returning capital to shareholders through share repurchases, believing its market valuation is undervalued, with the Board increasing total authorization to 11.4 million shares and approximately $50 million repurchased year-to-date - Management believes the current market valuation does not reflect the inherent strength of the business, prompting a focus on returning capital to shareholders3 Share Repurchase Program Details | Metric | Value | | :--- | :--- | | Increased Authorization | 7.5 million shares | | Total Authorized Shares | 11.4 million shares | | % of Outstanding Equity | 21% | | Repurchased Year-to-Date | ~$50 million | Tariff Impact The company anticipates an annual cost increase of $150 million to $200 million due to recent tariffs, but expects to fully offset these costs through operating initiatives and pricing actions by year-end - Estimated annual cost increase from tariffs is between $150 million and $200 million4 - The company expects to fully offset these cost increases through operating initiatives and pricing actions, with benefits fully implemented by year-end4 Detailed Financial Performance First Quarter Financial Results In Q1 2025, net sales decreased by 2.2% (3.8% organically) year-over-year, while operating income increased to $141 million from $137 million, adjusted EBITDA slightly decreased to $182 million, and operating cash flow remained stable at $141 million, with net leverage at 2.0x Q1 2025 vs Q1 2024 Key Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales Growth | -2.2% | - | - | | Organic Sales Growth | -3.8% | - | - | | Operating Income | $141M | $137M | +2.9% | | Adjusted EBITDA | $182M | $186M | -2.2% | | Operating Cash Flow | $141M | $141M | 0% | - Net leverage was 2.0x at the end of the first quarter611 - Net debt decreased to $1.6 billion from $1.7 billion at the end of fiscal 202411 Segment Performance The Commercial Foodservice segment saw a 2.8% organic sales decline but maintained a strong 26.7% organic adjusted EBITDA margin, while Residential Kitchen grew organic sales by 2.0% with an improved 11.6% margin, and Food Processing experienced a significant 12.9% organic sales decline and a drop in its adjusted EBITDA margin to 17.9% Q1 2025 Organic Net Sales Growth by Segment | Segment | Organic Net Sales Growth | | :--- | :--- | | Commercial Foodservice | (2.8)% | | Residential Kitchen | 2.0% | | Food Processing | (12.9)% | | Total Company | (3.8)% | Q1 2025 Organic Adjusted EBITDA Margin by Segment | Segment | Organic Adjusted EBITDA Margin | | :--- | :--- | | Commercial Foodservice | 26.7% | | Residential Kitchen | 11.6% | | Food Processing | 17.9% | | Total Company | 20.0% | Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Earnings For Q1 2025, Middleby reported net sales of $906.6 million, a decrease from $926.9 million in Q1 2024, yet net earnings increased to $92.4 million from $86.6 million, and diluted EPS rose to $1.69 from $1.59, benefiting from lower interest and restructuring expenses Q1 2025 Statement of Earnings (Selected Items, in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $906,627 | $926,926 | | Gross profit | $345,933 | $346,358 | | Income from operations | $140,598 | $137,133 | | Net earnings | $92,352 | $86,568 | | Diluted EPS | $1.69 | $1.59 | Condensed Consolidated Balance Sheets As of March 29, 2025, total assets were $7.40 billion, a slight increase from $7.28 billion at year-end 2024, with total liabilities at $3.67 billion, stockholders' equity increasing to $3.73 billion from $3.64 billion, and cash and cash equivalents notably rising to $745.1 million Balance Sheet Highlights (in thousands) | Account | Mar 29, 2025 (Thousands) | Dec 28, 2024 (Thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $745,143 | $689,533 | | Total assets | $7,401,381 | $7,283,151 | | Long-term debt | $2,341,295 | $2,351,118 | | Stockholders' equity | $3,729,921 | $3,638,431 | | Total liabilities and stockholders' equity | $7,401,381 | $7,283,151 | Non-GAAP Segment Information In Q1 2025, Commercial Foodservice generated the highest adjusted EBITDA at $151.4 million (26.9% margin), Residential Kitchen's adjusted EBITDA nearly doubled to $20.6 million (11.7% margin), while Food Processing's adjusted EBITDA fell to $30.1 million (17.9% margin) from $39.8 million (23.2% margin) in Q1 2024 Q1 2025 vs Q1 2024 Segment Adjusted EBITDA (in thousands) | Segment | Q1 2025 Adj. EBITDA (Thousands) | Q1 2025 Margin | Q1 2024 Adj. EBITDA (Thousands) | Q1 2024 Margin | | :--- | :--- | :--- | :--- | :--- | | Commercial Foodservice | $151,407 | 26.9% | $151,932 | 26.1% | | Residential Kitchen | $20,616 | 11.7% | $11,202 | 6.4% | | Food Processing | $30,066 | 17.9% | $39,819 | 23.2% | | Total Company | $182,080 | 20.1% | $185,785 | 20.0% | Non-GAAP Reconciliations The company reported adjusted net earnings of $111.3 million, or $2.08 per diluted share, for Q1 2025, an increase from $101.4 million, or $1.89 per share, in the prior-year period, with free cash flow for the quarter at $107.4 million, a decrease from $127.2 million in Q1 2024, primarily due to increased capital expenditures Reconciliation of Net Earnings to Adjusted Net Earnings (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net earnings | $92,352 | $86,568 | | Adjusted net earnings | $111,305 | $101,396 | | Diluted EPS | $1.69 | $1.59 | | Adjusted diluted EPS | $2.08 | $1.89 | Free Cash Flow Calculation (in thousands) | Metric | Q1 2025 (Thousands) | Q1 2024 (Thousands) | | :--- | :--- | :--- | | Cash flow from operating activities | $141,134 | $140,901 | | Less: Capital expenditures | ($33,732) | ($13,743) | | Free cash flow | $107,402 | $127,158 |