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The Middleby Corporation (MIDD - Analyst Report) reported impressive results for the third quarter of 2013. Earnings per share came in at $2.18, up roughly 36.3% from $1.60 in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of $1.90 by 14.7%. The increase in earnings was due to improved revenues and margins.

Revenues: Revenues generated by Middleby increased 39.7% year over year to $360.0 million, exceeding the Zacks Consensus Estimate of $348.0 million. This includes revenues from recent acquisitions which represents $71.8 million or 27.9% of sales.

In the reported quarter, revenues from the Commercial Foodservice Equipment Group rose 16.2% year over year while an increase of 11.7% was recorded excluding the impact of the acquisition of Nieco.

Revenues from the Food Processing Equipment Group improved 20.5% year over year in the third quarter, aided by the acquisition of Stewart Systems in Sep 2012. Excluding this, revenues grew 12.2% year over year.

The Residential Kitchen Equipment Group’s revenues were $58.0 million this quarter.

Costs/Margins: Middleby reported a 39.0% year-over-year increase in its cost of sales to $218.6 million, which represented 60.7% of total revenue. Gross margin increased from 39.0% to 39.3%, due to the increase in sales.

Selling and distribution expenses, as a percentage of revenues, increased 152 basis points (bps) year over year to 11.6%, while general and administrative expenses declined 156 bps to 8.94% of total revenue. Operating profit surged 42.4% year over year to $67.5 million, against $47.4 million recorded in the third quarter of 2012.

Balance Sheet: Middleby Corporation had cash and cash equivalents balance of approximately $29.4 million at the end of third-quarter 2013, versus $34.4 million in the preceding quarter. Long-term debt was $536.6 million, compared with $617.4 million in the end of the second quarter of 2013.

Guidance: The company anticipates continuing inorganic growth in coming quarters. The integration of Viking is on track, while the recently completed acquisition of Celfrost will increase the company’s presence in India. Additionally, increased demand for pre-cooked and pre-processed foods in emerging markets is likely to work in Middleby’s favor.

Other Stocks to Consider

Middleby currently carries a Zacks Rank #3 (Hold). Other stocks worth watching out for in the industry include Xylem Inc. (XYL - Analyst Report), DXP Enterprises, Inc. (DXPE - Snapshot Report) and Flowserve Corp. (FLS - Analyst Report). While Xylem carries a Zacks Rank #1 (Strong Buy), DXP Enterprises and Flowserve hold a Zacks Rank #2 (Buy).

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