Middleby's Q4 Earnings and Sales Beat Estimates, Increase Y/Y

Core Insights - The Middleby Corporation (MIDD) reported fourth-quarter 2024 adjusted earnings of $2.88 per share, exceeding the Zacks Consensus Estimate of $2.50, with an 8.7% year-over-year increase despite lower sales [1] - Net sales reached $1.01 billion, surpassing the consensus estimate of $995 million, marking a 0.5% year-over-year increase, although organic sales decreased by 1.3% [1] Segmental Results - The Commercial Foodservice Equipment Group, accounting for 60.1% of net sales, generated $609.4 million, down 2.9% year over year, with organic sales decreasing by 2.8% [3] - The Residential Kitchen Equipment Group, representing 18.3% of sales, totaled $185 million, a decline of 2.1% year over year, with organic sales plunging by 2.4% [4] - The Food Processing Equipment Group, making up 21.6% of sales, reported $219.4 million, an increase of 14.4% year over year, with organic sales rising by 4.7% [5] Margin Profile - Cost of sales increased by 0.5% year over year to $624.9 million, while gross profit rose by 0.6% to $388.9 million, maintaining a gross margin of 38.4% [6] - Selling, general and administrative expenses decreased by 6.9% year over year to $178.4 million, leading to an operating income increase of 8.2% to $208.5 million, with an operating margin of 20.6% [6] Cash Flow and Balance Sheet - At the end of the first quarter, cash and cash equivalents stood at $689.5 million, up from $247.5 million at the end of December 2023, while long-term debt decreased to $2.35 billion [8] - In 2024, net cash generated from operating activities was $686.8 million, compared to $628.8 million in the previous year, with free cash flow reaching $640 million [9] Strategic Developments - Middleby announced plans to spin off its food processing business into a standalone public company, expected to be completed by early 2026, aiming to enhance strategic focus and capital optimization for both entities [10][11] - The food processing business reported revenues of $731 million with a 25% adjusted EBITDA margin, while the commercial foodservice segment achieved $2.4 billion in revenues with a 27% adjusted EBITDA margin [12]