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Middleby (MIDD) Q1 Earnings & Revenues Surpass Estimates

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The Middleby Corporation (MIDD - Free Report) reported better-than-expected first-quarter 2022 results. Its earnings and sales beat estimates by 0.5% and 6.8%, respectively.

MIDD’s adjusted earnings in the reported quarter were $2.13 per share, surpassing the Zacks Consensus Estimate of $2.12. The bottom line increased from the year-ago figure of $1.79 on the back of sales.

Revenue Picture

In the first quarter, Middleby’s sales were $994.7 million, reflecting year-over-year growth of 31.2%. MIDD’s top line beat the Zacks Consensus Estimate of $932 million.

Organic revenues in the reported quarter increased 11.7% year over year on the back of improving market conditions. Acquired assets boosted sales 20.7%, while movements in foreign currencies had a negative impact of 1.2%.

Middleby reports net sales under three segments. A brief discussion on the same is provided below:

Sales from the Commercial Foodservice Equipment Group (representing 54.7% of the net sales) were $543.6 million, up 13.0% year over year. Organic sales in the reported quarter increased 10.9%. Buyouts boosted sales by 3%, while movements in foreign currencies had a headwind of 1%.

Sales from the Residential Kitchen Equipment Group (representing 33.3% of the reported quarter’s net sales) totaled $331.1 million, up 101.4% year over year. Organic sales in the quarter under review increased 16.1%. Buyouts had a positive impact of 86.6%, whereas movements in foreign currencies had a negative impact of 1.3%.

Sales from the Food Processing Equipment Group (representing 12% of the reported net sales) summed $119.9 million, increasing 6.6% year over year. Organic sales in the quarter grew 8.4%, whereas movements in foreign currencies had a negative impact of 1.8%.

The Middleby Corporation Price, Consensus and EPS Surprise The Middleby Corporation Price, Consensus and EPS Surprise

The Middleby Corporation price-consensus-eps-surprise-chart | The Middleby Corporation Quote

Margin Profile

In the first quarter, Middleby’s cost of sales increased 37.7% year over year to $664.2 million, reflecting 66.8% of sales compared with the year-ago quarter’s 63.6%. Gross profit expanded 19.8% to $330.5 million. Gross margin decreased 320 basis points (bps) to 33.2%.

Selling, general and administrative expenses increased 33% year over year to $206.1 million, accounting for 20.7% of sales in the reported quarter. Operating income in the first quarter increased to $122.6 million from $121.2 million. Operating margin decreased 370 bps to 12.3%.

Net interest expenses and deferred financing amortization totaled $17.7 million, up 9.9% from the year-ago quarter’s $16.1 million.

Balance Sheet and Cash Flow

Exiting the first quarter, Middleby had cash and cash equivalents of $146.6 million, down 18.7% from $180.4 million witnessed at the end of the last reported quarter. Long-term debt increased 7.7% sequentially to $2,570.1 million.

In the first three months of 2022, MIDD used net cash of $15.3 million from operating activities compared with $59.7 million generated in the year-ago quarter. Capital expenditure totaled $14.5 million compared with $5.4 million recorded in the year-ago quarter. Free cash outflow was $29.8 million in the reported quarter.

Outlook

In the quarters ahead, Middleby anticipates benefiting from strengthening end markets and a strong backlog level. However, challenges in the supply chain, cost inflation and labor issues are likely to be spoilsports.

Zacks Rank & Stocks to Consider

With a market capitalization of $7.7 billion, Middleby currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies from the industrial products sector are discussed below.

Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have rallied 7.3% in the past three months.

Roper Technologies, Inc. (ROP - Free Report) presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 2%, on average.

In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has declined 2.6% in the past three months.

Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.

In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 21.8% in the past three months.