Middleby(MIDD) - 2025 Q3 - Quarterly Results

Financial Performance - Net sales for Q3 2025 were $982 million, a 4% increase year-over-year, but flat on an organic basis[5] - Adjusted EBITDA for Q3 2025 was $196 million, down from $213 million in the prior year, reflecting a $12 million adverse impact from tariffs[7] - The diluted EPS for Q3 2025 was $(10.15), while adjusted EPS was $2.37, compared to $2.33 in the prior year[5] - Total net sales for the three months ended September 27, 2025, were $982.131 million, an increase from $942.809 million in the same period of 2024, representing a growth of 4.2%[19] - Segment adjusted EBITDA for the three months ended September 27, 2025, was $196.404 million, with an adjusted EBITDA margin of 20.0%, compared to $212.972 million and 22.6% in the prior year[19] - The company reported a net loss of $512.978 million for the third quarter of 2025, compared to a net income of $114.166 million in the third quarter of 2024[24] - For the nine months ended September 27, 2025, total net sales were $2.866617 billion, slightly down from $2.861281 billion in the same period of 2024[21] Segment Performance - Organic net sales growth by segment: Commercial Foodservice at 1.6%, Residential Kitchen at (0.6)%, and Food Processing at (5.6)%[4] - The Food Processing segment saw a 13.2% increase in net sales, driven by improved market dynamics in Q3[4] - Segment operating income for the Commercial segment was $143.350 million, with an operating income margin of 23.7%, while the Residential segment reported an operating loss of $701.546 million[19] Strategic Initiatives - The company reported a non-cash impairment charge of $709 million due to a strategic review of the Residential Kitchen business[5] - The strategic review of the Residential Kitchen business aims to unlock shareholder value and improve long-term growth prospects[3] - The company incurred impairments of $709.116 million in the third quarter of 2025, significantly impacting overall financial performance[24] Cash Flow and Capital Expenditures - Operating cash flows for Q3 2025 were $176.3 million, an increase from $156.7 million in Q3 2024, while for the nine months ended, it decreased slightly to $439.5 million from $447.1 million[25] - Free cash flow for Q3 2025 was $156.1 million, up from $145.2 million in Q3 2024, and for the nine months ended, it decreased to $364.6 million from $410.9 million[25] - Capital expenditures for Q3 2025 were $20.3 million, compared to $11.5 million in Q3 2024, and for the nine months ended, it increased to $74.9 million from $36.2 million[25] Future Projections - For Q4 2025, total revenue is expected to be between $990 million and $1.02 billion, with adjusted EBITDA projected at $200-210 million[10] - The company’s net leverage ratio stands at 2.3x, with net debt at $1.9 billion[10] Non-GAAP Financial Measures - Non-GAAP financial measures are used by the company to provide greater insight into its financial performance, focusing on organic net sales growth and adjusted EBITDA[27] - The company believes that adjusted net earnings and adjusted diluted per share measures are useful for evaluating its operations and financial performance[27] - The company aims to provide investors with the same information it uses internally for assessing core operating performance through its non-GAAP financial measures[29] - The company’s net debt and net leverage are key metrics for evaluating its financial health and operational performance[27] - The company’s management primarily focuses on non-GAAP items for business planning purposes, as they believe these measures reflect core operating performance more accurately[27] Shareholder Actions - The company repurchased 3.5 million shares year-to-date for approximately $500 million, representing 6.4% of equity[5] - The company incurred strategic transaction costs of $6.1 million for Q3 2025 and $16.4 million for the nine months ended September 27, 2025[25] - Corporate and other general company expenses impacted segment adjusted EBITDA, amounting to $20.0 million for the three months ended September 27, 2025[22] - Restructuring expenses for the three months ended September 27, 2025, totaled $2.822 million, compared to $2.519 million in the same period of 2024[24] - Foreign exchange rates positively impacted segment adjusted EBITDA by approximately $1.8 million for the three months ended September 27, 2025[22]