The Middleby Corporation MIDD reported fourth-quarter 2024 adjusted earnings of $2.88 per share, which beat the Zacks Consensus Estimate of $2.50. The bottom line increased 8.7% year over year due to lower sales.

Net sales of $1.01 billion beat the consensus estimate of $995 million. The top line increased 0.5% year over year. Organic sales decreased 1.3%. Acquired assets increased sales by 2.1%, while movements in foreign currencies had a negative impact of 0.2%.

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MIDD’s Segmental Results

Sales from the Commercial Foodservice Equipment Group segment (representing 60.1% of net sales) were $609.4 million, down 2.9% year over year. Our estimate was $602.0 million. Organic sales decreased 2.8%. Buyouts had a positive impact of 0.2% on sales, while foreign-currency translation had an adverse impact of 0.3%.

Sales from the Residential Kitchen Equipment Group segment (18.3%) totaled $185 million, down 2.1% year over year. Our estimate was $187.8 million. Organic sales plunged 2.4%. Foreign-currency translation had a positive impact of 0.4%.

Sales from the Food Processing Equipment Group segment (21.6%) summed $219.4 million, up 14.4% year over year. We expected the metric to be $204.3 million. Organic sales increased 4.7% year over year. Acquisitions boosted sales by 10.2%, while foreign currency movements had an unfavorable impact of 0.5%.

Middleby’s Margin Profile

Middleby’s cost of sales increased 0.5% year over year to $624.9 million. Gross profit increased 0.6% to $388.9 million. The gross margin was 38.4%, in line with the year-ago quarter.

Selling, general and administrative expenses decreased 6.9% year over year to $178.4 million. Operating income increased 8.2% year over year to $208.5 million. Operating margin increased 150 basis points (bps) to 20.6%.

Adjusted EBITDA increased 6.8% year over year to $251.2 million. Adjusted EBITDA margin increased 150 bps to 24.8%.

MIDD’s Balance Sheet and Cash Flow

Exiting the first quarter, Middleby had cash and cash equivalents of $689.5 million compared with $247.5 million at the end of December 2023. Long-term debt was $2.35 billion at the end of the fourth quarter compared with $2.38 billion at 2023-end.

In 2024, Middleby generated net cash of $686.8 million from operating activities compared with $628.8 million in the year-ago period. Capital expenditure totaled $46.8 million compared with $85.2 million in the year-ago period. Free cash flow was $640 million compared with $543.6 million in the year-ago period.

Spin-Off of Middleby’s Food-Processing Business

Middleby announced that it plans to separate its food processing business into a standalone public company, Middleby Food Processing. The tax-free spin-off is expected to be completed by early 2026. This move aims to create two independent companies, namely, The Middleby Corporation (Middleby RemainCo), which will be focused on commercial foodservice and residential kitchens, and Middleby Food Processing, targeting industrial food markets.

The move is expected to unlock value by enabling heightened strategic focus, capital optimization and M&A opportunities for both entities. MIDD’s food processing business reported revenues of $731 million and a 25% adjusted EBITDA margin, while the commercial foodservice segment of Middleby RemainCo achieved $2.4 billion in revenues with a 27% adjusted EBITDA margin.

MIDD’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Tetra Tech, Inc. TTEK reported earnings of 35 cents per share in the first quarter of fiscal 2025 (ended December 2024), which beat the Zacks Consensus Estimate of 34 cents. This compares with earnings of 28 cents per share a year ago.

Tetra posted revenues of $1.2 billion for the quarter ended December 2024, surpassing the consensus estimate by 8.85%. This compares with year-ago revenues of $1.02 billion. The company topped the consensus estimate for revenues in each of the last four quarters.

Waste Management, Inc. WM reported earnings of $1.70 per share in the fourth quarter of 2024, which missed the Zacks Consensus Estimate of $1.79. This compares with earnings of $1.74 per share a year ago.

WM reported revenues of $5.89 billion for the quarter ended December 2024, surpassing the consensus estimate by 0.18%. This compares with year-ago revenues of $5.22 billion. The company topped the consensus estimate for revenues two times in the last four quarters.

Packaging Corporation of America PKG reported adjusted earnings per share of $2.47 in the fourth quarter of 2024, which missed the Zacks Consensus Estimate of $2.51 by a margin of 2%. The bottom line matched PKG’s guidance and grew 16% year over year.

Sales in the fourth quarter rose 10.7% year over year to $2.15 billion due to higher volumes and price/mix in both segments. The top line beat the consensus estimate of $2.13 billion.

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