Back to top

Image: Bigstock

Middleby's (MIDD) Q2 Earnings Beat, Outlook Encouraging

Read MoreHide Full Article

Machinery behemoth The Middleby Corporation (MIDD - Free Report) reported better-than-expected results for second-quarter 2018.

Earnings/Revenues 

Quarterly adjusted earnings came in at $1.63 per share, beating the Zacks Consensus Estimate of $1.60. However, the bottom line came in higher than the year-ago tally of $1.39 per share.

Net sales in the reported quarter came in at $668.1 million, up 15.3% year over year. The top line also outpaced the Zacks Consensus Estimate of $651 million. The upswing was driven by acquisition benefits, Accounting Standards Codification 606 adoption, and favorable foreign currency-translation impact.

Segmental Break-Up

Net sales of the Commercial Foodservice Equipment Group were up 24.1% year over year to $414.1 million.

Residential Kitchen Equipment Group’s revenues increased 4.7% year over year to $160.4 million.

Food Processing Equipment Group’s revenues inched up 1.3% year over year to $93.6 million.

The Middleby Corporation Price, Consensus and EPS Surprise

 

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

Costs/Margins

Cost of sales in the second quarter was $417.4 million compared with $344.7 million in the year-ago quarter. Gross profit margin in the quarter came in at 37.5%, shrinking 300 basis points (bps) year over year. Gross margin shrunk due to reduced margins resulting from acquired businesses, unfavorable mix of the Food Processing Equipment segment and lesser volumes.

Selling, general and administrative expenses totaled $135 million, as against $121.6 million incurred in the year-ago period. Operating margin came in at 16.7%, contracting 300 bps year over year.

Balance Sheet/Cash Flow

Middleby exited the second quarter with cash and cash equivalents of $92.3 million against $89.7 million recorded at the end of 2017. Long-term debt was $2,060.3 million compared with $1,023.7 million recorded as of Dec 31, 2017.

During the June-end quarter, operating cash flow increased to $146.6 million from $86 million in the year-ago quarter.

Outlook

Middleby expects that the recently-made acquisitions will continue to bolster its revenues and profitability in the upcoming quarters. The company believes the ongoing restructuring moves and product launches will also help strengthen its competency.

Zacks Rank & Other Key Picks

Middleby currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the Zacks Industrial Products sector are listed below:

Altra Industrial Motion Corp. (AIMC) sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alamo Group, Inc. (ALG - Free Report) carries a Zacks Rank #2. The stock came up with an average positive earnings surprise of 6.06% over the preceding four quarters.

Apogee Enterprises, Inc. (APOG - Free Report) is another Zacks #2 Ranked company. The stock generated an average positive earnings surprise of 0.88% during the same time frame.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in