Financial Data and Key Metrics Changes - The company authorized an additional $7.5 billion in shares for its accelerated buyback program, representing 21% of outstanding equity [3][4] - Operating cash flows reached over $141 million, the highest for the first quarter, with free cash flows totaling $107 million for the quarter and $620 million for the trailing twelve months [12] - The company has successfully reduced its leverage from three times to two times over the past two years, maintaining a strong balance sheet [12] Business Line Data and Key Metrics Changes - The residential segment saw growth primarily due to outdoor products, with margins holding well [16] - The commercial foodservice business experienced success from investments in the ice and beverage platform, although muted buying levels from major chain customers offset some gains [14] - Food processing revenues dropped due to customer-driven delivery delays, but the company anticipates higher sequential revenue in Q2 [15][19] Market Data and Key Metrics Changes - The company is facing tariff-related costs estimated to increase annual expenses by approximately $150 million to $200 million, with a significant portion attributed to foreign-sourced componentry from China [6][18] - The company expects to offset tariff impacts by the end of the year through operational actions and pricing adjustments [7][18] Company Strategy and Development Direction - The company plans to separate its food processing business into a standalone public company by early 2026, aiming to unlock shareholder value and enhance strategic focus [4][5] - The company is focusing on market expansion opportunities in adjacent markets such as poultry, pet foods, and snacks [5][22] - Strategic investments have been made to drive sustainable long-term growth, particularly in automation, digital technologies, and IoT connectivity [8][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenging market conditions affecting major chain customers but remains optimistic about sequential revenue increases throughout the year [17][20] - The company is confident in its ability to navigate tariff challenges and believes it is well-positioned to capitalize on market opportunities [7][45] - The long-term outlook for the food processing segment remains bullish, with a robust pipeline of opportunities [21][24] Other Important Information - The company plans to hold a dedicated Shareholder Day in Q4 to present further details on the strategic roadmap for the food processing business [6] - The company has received multiple industry awards for its innovative products, highlighting its commitment to innovation [10][99] Q&A Session Summary Question: 2025 sales guidance and segment outlook - Management indicated that the full-year outlook is primarily driven by the commercial segment, with expectations for improvement over the year despite current challenges [30][32] Question: Buyback decision rationale - The buyback decision was influenced by the company's strong cash flow, balance sheet position, and belief that the current share price does not reflect the business's strength [39][41] Question: Tariff impact and share gains - Management expressed confidence in offsetting tariff costs through operational initiatives and highlighted opportunities for share gains due to a strong U.S. manufacturing footprint [44][46] Question: Segment-level tariff cost allocation - The estimated tariff impact is weighted more towards commercial (approximately 70%), followed by residential (20%), and food processing (10%) [53] Question: Revenue outlook and new store openings - Management expects sequential improvement in revenue for Q2 and noted that new store openings are anticipated to be higher in the second half of the year [62] Question: Competitive pricing landscape - The company has observed competitors implementing price increases ranging from 10% to 25%, while it plans a mid-single-digit increase [83]

Financial Data and Key Metrics Changes - The company authorized an additional $7.5 billion in shares for its accelerated buyback program, representing 21% of outstanding equity, reflecting confidence in the business [2][3] - Operating cash flows reached over $141 million, the highest for the first quarter, with free cash flows totaling $107 million for the quarter and $620 million for the trailing twelve months [9][10] - The company has successfully reduced its leverage from three times to two times over the past two years, maintaining a strong balance sheet [9][10] Business Line Data and Key Metrics Changes - The residential segment saw growth primarily due to outdoor products, with margins holding steady [12][19] - The commercial foodservice business experienced success from investments in the ice and beverage platform, although muted buying levels from major chain customers offset some gains [11][12] - Food processing revenues dropped due to customer-driven delivery delays, but the company anticipates higher sequential revenue in Q2 [12][16] Market Data and Key Metrics Changes - The company is actively working to mitigate tariff-related costs, which are expected to increase annual expenses by approximately $150 million to $200 million [5][12] - The impact of tariffs is weighted more towards the commercial and residential segments, with an estimated 70% impact on commercial, 20% on residential, and 10% on food processing [49][50] Company Strategy and Development Direction - The company plans to separate its food processing business into a standalone public company by early 2026, aiming to unlock shareholder value and enhance operational focus [3][4] - Strategic investments have been made to drive sustainable long-term growth, focusing on automation, digital technologies, and expanding into adjacent markets like poultry and snacks [6][19] - The company is committed to using the majority of its free cash flow for share repurchases while maintaining strategic growth investments [2][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market dynamics and expects to emerge stronger despite challenges posed by tariffs and muted customer spending [5][13] - The long-term outlook for the food processing segment remains bullish, with a robust pipeline and expectations for sequential revenue increases [18][20] - Management acknowledged the uncertainty in the operating environment but remains optimistic about the company's positioning and growth potential over the next few years [22][21] Other Important Information - The company plans to hold a dedicated Shareholder Day in Q4 to present further details on the strategic roadmap for the food processing business [4] - Recent industry awards for new products highlight the company's commitment to innovation and market leadership [7][96] Q&A Session Summary Question: What is the 2025 sales guidance and where are the biggest changes? - The full-year outlook is primarily driven by the commercial segment, with changes due to macroeconomic factors and trade environment uncertainties affecting investment decisions across segments [25][26] Question: What informed the buyback decision? - The decision was influenced by the company's strong valuation, cash flow growth, and the belief that the share price does not reflect the business's strength [31][32] Question: How are tariffs impacting the business and what are the strategies to mitigate them? - Tariffs are expected to have a significant impact, particularly on commercial and residential segments, but the company is confident in offsetting these costs through pricing actions and operational initiatives [38][50] Question: What is the revenue outlook for the second half of 2025? - The company expects sequential improvement in revenue, with new store openings from major customers contributing positively, although some delays may occur [59][60] Question: Can you provide an update on new product rollouts and innovations? - The company is seeing good momentum with the Open Kitchen initiative and has several exciting new products in the pipeline, including advancements in beverage dispensing and cooking technologies [88][92]

Core Insights - Middleby (MIDD) reported revenue of $906.63 million for Q1 2025, a year-over-year decline of 2.2%, with an EPS of $2.08 compared to $1.89 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $941.15 million, resulting in a surprise of -3.67%, while the EPS exceeded the consensus estimate of $1.94 by +7.22% [1] Revenue Breakdown - Commercial Foodservice revenue was $562.72 million, below the average estimate of $579.76 million, reflecting a year-over-year decline of -4.7% [4] - Residential Kitchen revenue reached $176 million, slightly below the average estimate of $182.68 million, showing a year-over-year increase of +1.2% [4] - Food Processing revenue was reported at $167.91 million, compared to the estimated $178.72 million, marking a year-over-year increase of +3.2% [4] Segment Operating Income - Commercial Foodservice segment operating income was $132.07 million, exceeding the average estimate of $128.21 million [4] - Residential Kitchen segment operating income was $11.81 million, surpassing the average estimate of $9.20 million [4] - Food Processing segment operating income was $23.51 million, significantly lower than the estimated $34.98 million [4] Stock Performance - Over the past month, Middleby shares have returned +8.2%, compared to the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1 - Middleby (MIDD) reported quarterly earnings of $2.08 per share, exceeding the Zacks Consensus Estimate of $1.94 per share, and showing an increase from $1.89 per share a year ago, representing an earnings surprise of 7.22% [1] - The company posted revenues of $906.63 million for the quarter ended March 2025, which was 3.67% below the Zacks Consensus Estimate and a decrease from $926.93 million year-over-year [2] - Over the last four quarters, Middleby has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Group 2 - The stock has lost about 0.1% since the beginning of the year, while the S&P 500 has declined by 4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $2.44 on revenues of $1.01 billion, and for the current fiscal year, it is $9.69 on revenues of $3.99 billion [7] - The Zacks Industry Rank for Manufacturing - General Industrial is currently in the bottom 37% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Middleby's Q1 2025 net sales decreased by 2.2% to $906.6 million, compared to $926.9 million in Q1 2024[8] - Adjusted EBITDA for Q1 2025 was $182.1 million, a decrease of 2.0% compared to $185.8 million in Q1 2024[8] - Operating cash flow remained relatively stable at $141.1 million in Q1 2025, compared to $140.9 million in Q1 2024[8] - Middleby repurchased $29 million of common stock in Q1 2025 and an additional $21 million to date in Q2 2025[25] Segment Performance - Commercial Foodservice net sales decreased by 3.2% to $562.7 million in Q1 2025[13] - Residential Kitchen net sales increased by 1.2% to $176.0 million in Q1 2025[16] - Food Processing net sales decreased by 2.2% to $167.9 million in Q1 2025[19] Strategic Initiatives - Middleby plans to allocate the vast majority of free cash flow to share repurchases, aiming to reduce outstanding shares by 6–8% annually[2] - The company is targeting a leverage ratio of 2.0–2.5x[2] - Middleby is progressing with the Food Processing spin-off, targeted for completion by early 2026[4] - Preliminary tariff cost effect is projected to be $150–200 million annually, with China representing roughly 50% of the identified cost exposure[3] Regional Performance - In Commercial Foodservice, U S and Canada revenue was $413.9 million, a decrease of 2.8%[14] - In Residential Kitchen, U S and Canada revenue was $112.9 million, an increase of 5.5%[17] - In Food Processing, U S and Canada revenue was $93.2 million, a decrease of 10.2%[20]

[First Quarter 2025 Results Overview](index=1&type=section&id=First%20Quarter%202025%20Results%20Overview) [Key Announcements & Financial Highlights](index=1&type=section&id=Key%20Announcements%20%26%20Financial%20Highlights) 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 2026[1](index=1&type=chunk) - The company will accelerate its share repurchase program, intending to use the vast majority of its free cash flow for buybacks[1](index=1&type=chunk)[3](index=3&type=chunk) - 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 equity[3](index=3&type=chunk) [Strategic & Operational Updates](index=1&type=section&id=Strategic%20%26%20Operational%20Updates) [Share Repurchasing Program](index=1&type=section&id=Share%20Repurchasing) 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 shareholders[3](index=3&type=chunk) 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](index=1&type=section&id=Tariff%20Impact) 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 million**[4](index=4&type=chunk) - The company expects to fully offset these cost increases through operating initiatives and pricing actions, with benefits fully implemented by year-end[4](index=4&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) [First Quarter Financial Results](index=1&type=section&id=2025%20First%20Quarter%20Financial%20Results) 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 quarter[6](index=6&type=chunk)[11](index=11&type=chunk) - Net debt decreased to **$1.6 billion** from **$1.7 billion** at the end of fiscal 2024[11](index=11&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) 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)](index=3&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) [Condensed Consolidated Statements of Earnings](index=3&type=section&id=THE%20MIDDLEBY%20CORPORATION%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20EARNINGS) 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](index=4&type=section&id=THE%20MIDDLEBY%20CORPORATION%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) 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](index=5&type=section&id=THE%20MIDDLEBY%20CORPORATION%20NON-GAAP%20SEGMENT%20INFORMATION%20%28UNAUDITED%29) 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](index=6&type=section&id=THE%20MIDDLEBY%20CORPORATION%20NON-GAAP%20INFORMATION%20%28UNAUDITED%29) 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** |

Financial Data and Key Metrics Changes - The company reported revenues for 2024 at approximately $3.9 billion, a modest decline compared to the previous year. Adjusted EBITDA was $866 million with a margin of 22.4%, slightly ahead of last year [19] - In Q4, revenues exceeded $1 billion, with adjusted EBITDA of over $251 million, marking a record margin of 24.8%. GAAP earnings per share were $2.07, while adjusted EPS was $2.88 [20] - Free cash flow reached $229 million in Q4, contributing to a total of over $640 million for the year, with a free cash flow conversion rate of 140% [18][23] Business Line Data and Key Metrics Changes - The Food Processing segment achieved 4.7% organic revenue growth in Q4, resulting in revenues of over $219 million and an adjusted EBITDA margin of 29.6%, up 200 basis points year-over-year [20] - Residential revenues in Q4 were $185 million, down 2.4% year-over-year, but marked the slowest decline of the year. The adjusted EBITDA margin was 13%, the highest in 1.5 years [21] - Commercial revenues in Q4 were over $609 million, with organic revenues down 2.8% year-over-year, maintaining healthy margins over 28% [22] Market Data and Key Metrics Changes - The company noted that macro conditions remained challenging for both commercial and residential businesses but showed signs of gradual improvement moving forward [14] - The Food Processing business finished the year exceptionally strong, with expectations for continued growth into 2025 driven by favorable long-term market drivers [15] Company Strategy and Development Direction - The company announced plans to separate its Food Processing business into a stand-alone public company, aiming to create two independent industry leaders and enhance strategic focus [5][6] - The remaining Middleby Corporation will focus on commercial and residential kitchen equipment, with an emphasis on innovation and capturing market opportunities in automation and digital technologies [9][10] - The company plans to execute the separation through a tax-free spinoff expected to be completed by early 2026 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the residential business, anticipating gradual improvement in the coming years due to strategic investments made during the downturn [49][50] - The company expects organic revenue growth in the low single digits for 2025, with profitability growth rates exceeding organic revenue growth [30] - Management highlighted the importance of M&A opportunities for both the Food Processing and remaining businesses, with a balanced approach to capital allocation [63] Other Important Information - The company added two new Board members, enhancing the Board's capabilities and perspectives as part of a refreshment process [11][12] - The company is focused on increasing the mix of parts and services across its business segments, leveraging IoT and data to enhance customer experience [124] Q&A Session Summary Question: Can you walk us through the decision to separate Food Processing? - Management indicated that the decision was based on a long-term strategic review, believing that separation will accelerate growth for both entities [42][44] Question: What are the expected free cash flow conversions for the separate businesses? - Management suggested that both businesses could achieve 100% or greater free cash flow conversion, given their similar cash flow characteristics [46] Question: How does the company view the recovery in the residential business? - Management noted that the residential business is at a cyclical trough but sees significant opportunities for growth and margin expansion in the coming years [50][72] Question: What is the outlook for organic growth in Commercial Foodservice? - Management expects a slow start to the year but anticipates improving conditions throughout 2025, with new store openings and increased consultant activity driving growth [80][86] Question: What is the leverage profile expected post-spin? - Management indicated that the Food Processing business would likely have less leverage, allowing for more focus on M&A opportunities [95]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the Fiscal Year Ended January 2, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 1-9973 THE MIDDLEBY CORPORATION (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) ...