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MIDDLEBY Corp (MIDD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered resilient profitability and cash flow despite softer top-line: Adjusted EPS $2.08 (beat), GAAP EPS $1.69, revenue $0.91B (miss), Adjusted EBITDA $182M; Board lifted buyback authorization to 11.4M shares (~21% of equity) and plans to return the vast majority of FCF to repurchases.
  • Against S&P Global consensus, Adjusted/Normalized EPS beat by ~$0.11 while revenue missed by ~3.5% and EBITDA modestly trailed; mix and cost control supported margins, with operating margin up 70 bps YoY. Values retrieved from S&P Global.*
  • Management detailed a $150–$200M annual tariff headwind with planned July 1 pricing (mid- to high-single-digit) and operational actions to fully offset by year-end; near-term margin pressure expected to build into 2H before offsets take hold.
  • Spin-off of Food Processing remains on track for early 2026; focus on accelerating share repurchases (YTD ~$50M) and prioritizing capital return provides a clear stock-catalyst framework alongside a Q4’25 Food Processing investor day.

What Went Well and What Went Wrong

  • What Went Well
    • Margins and cash generation held up: operating margin rose to 15.5% (from 14.8% YoY) and operating cash flow was $141M (flat YoY), supporting $107M FCF. “Highest for a first quarter,” per CFO.
    • Residential improved mix/margins (Adj. EBITDA margin 11.7% vs 6.4% YoY) with outdoor products strength; management sees Residential potentially the strongest segment in 2025 (cautiously, flat revenue YoY).
    • Capital return ramp: authorization increased by 7.5M shares to 11.4M total (~21% of equity); “targeting return of the vast majority of free cash flow to shareholders through share repurchases.”
  • What Went Wrong
    • Top-line softness vs. Street: revenue $906.6M trailed ~$939.7M consensus; Food Processing saw customer-driven delivery delays and unfavorable mix pressuring margins. Values retrieved from S&P Global.*
    • Tariff overhang: preliminary $150–$200M annual cost headwind with component exposure (mainly China) skewed ~70% Commercial / ~20% Residential / ~10% Food Processing; offsets require time and pricing.
    • Outlook tempered: Commercial demand from large chains remains muted (store openings push-outs), and management avoided a point estimate for FY revenue; expects sequential improvement but margin pressures likely to grow in 2H before offsets complete.

Financial Results

MetricQ1 2024Q4 2024Q1 2025 (Actual)Q1 2025 (Consensus)
Revenue ($USD Millions)$926.9 $1,013.9 $906.6 $939.7*
GAAP Diluted EPS ($)$1.59 $2.07 $1.69 —
Adjusted EPS ($)$1.89 $2.88 $2.08 $1.97*
Operating Income ($M)$137.1 $169.9 $140.6 —
Operating Margin (%)14.8% 16.8% 15.5% —
Adjusted EBITDA ($M, company-reported)$185.8 $251.2 $182.1 —
EBITDA ($M, S&P definition)——$175.2*$185.7*
Adjusted EBITDA Margin (%)20.0% 24.8% 20.1% —
Cash from Operations ($M)$140.9 $239.7 $141.1 —
Free Cash Flow ($M)$127.2 $229.1 $107.4 —
Note: Asterisked values are from S&P Global consensus/actuals.*

Segment performance (YoY)

  • Commercial Foodservice: Sales $562.7M vs $581.4M; Operating Margin 23.5% vs 22.4%; Adj. EBITDA Margin 26.9% vs 26.1%.
  • Residential Kitchen: Sales $176.0M vs $173.9M; Operating Margin 6.7% vs 2.6%; Adj. EBITDA Margin 11.7% vs 6.4%.
  • Food Processing: Sales $167.9M vs $171.6M; Operating Margin 14.0% vs 19.8%; Adj. EBITDA Margin 17.9% vs 23.2%.
SegmentQ1 2024 Net Sales ($M)Q1 2025 Net Sales ($M)Operating Income %Adj. EBITDA %
Commercial Foodservice$581.4 $562.7 22.4% → 23.5% 26.1% → 26.9%
Residential Kitchen$173.9 $176.0 2.6% → 6.7% 6.4% → 11.7%
Food Processing$171.6 $167.9 19.8% → 14.0% 23.2% → 17.9%

KPIs and Balance Sheet

  • Net leverage 2.0x; Net debt ~$1.6B; borrowing availability ~$3.0B (end Q1).
  • Operating cash flow $141.1M; Capex $33.7M; FCF $107.4M.
  • Share repurchases: ~$29.2M in Q1; year-to-date ~$50M at time of release; authorization lifted to 11.4M shares (~21% of equity).
  • Tariffs: preliminary annual cost impact $150–$200M, expected fully offset by year-end via pricing and operations.

Guidance Changes

MetricPeriodPrevious Guidance/OutlookCurrent Guidance/OutlookChange
Total Company Organic RevenueFY 2025Low single-digit organic growth; profitability growth > revenue (Feb 25) No point estimate; tone more muted; sequential improvement expected led by Commercial; FP growth “may be challenged”; Residential “flat” YoY likely strongest on margin hold. Softer tone / more cautious
Commercial Foodservice2025 run-rateAt least low-single-digit growth, modest margin expansion (Feb 25) Sequential revenue improvement through 2025; July 1 pricing; margin pressure likely to grow in 2H before offsets. Mixed: pacing shift; tariff overhang
Food Processing2025Mid-single-digit org. growth; margins lower vs 2024 due to integration (Feb 25) Q1 “anomaly”; meaningfully higher revenue in Q2; margins to improve sequentially; full-year growth may be challenged by uncertainty. Lower growth confidence
Residential Kitchen2025At least low-single-digit growth, modest margin expansion (Feb 25) Likely flat revenue for 2025; double-digit margins targeted; tariffs negative for outdoor revenue. Lower revenue outlook, margin hold
Pricing / Tariffs2025—July 1 broad price increase (mid- to high-single-digit) to offset tariffs; full offset by YE25. New item

Earnings Call Themes & Trends

TopicQ3 2024 (10/31/24)Q4 2024 (2/25/25)Q1 2025 (5/7/25)Trend
Capital returnFocus on deleveraging; cash flow strong. Record FCF $640M; initial buybacks; considering more balanced capital allocation. “Vast majority” of FCF to buybacks; authorization to 21% of equity. Accelerating buybacks
TariffsNot a focus. —Noted supply chain progress and savings. $150–$200M headwind; 70/20/10 CFS/Resi/FP exposure; July 1 pricing. New headwind; offset plan
Food Processing spin—Announced spin for early 2026; drivers and peer re-rating case. On track; investor day planned Q4’25. Continuing
Demand / Store openingsQSR/casual softness; delays; 2025 recovery expected. Sequential growth in 2025 anticipated; Q4 strong. Sequential improvement expected; new store plans weighted 2H and internationally (75–80% ex-NA). Gradual
Innovation / IoTNAFEM pipeline; automation, beverage, Open Kitchen. Expanded showcases; strong product roadmap. Continued wins; “Sizzling 7” at NRA; Open Kitchen driving rollouts. Building traction

Management Commentary

  • “We are now targeting a return of the vast majority of Middleby's free cash flow to shareholders through share repurchases over the foreseeable future… [authorization] now represents 11.4 million shares, or 21% of outstanding equity.” — CEO Tim FitzGerald.
  • “Preliminary estimate of tariff-related costs…approximately $150 to $200 million annually. We expect to fully offset…by year end.” — CEO Tim FitzGerald.
  • “Operating cash flows of just over $141 million are our highest for a first quarter…we have consistently delevered from 3x to a modest 2x today.” — CFO Bryan Mittelman.
  • “We expect meaningfully higher [Food Processing] revenue sequentially into Q2…Margins will also improve from Q1…full-year growth may be challenged.” — CFO Bryan Mittelman.
  • “Pricing [effective July 1]…mid- to high single-digit range…we believe we’re positioned below the majority of competitors.” — COO/Commercial Steve Spittle.

Q&A Highlights

  • Capital allocation: Buybacks prioritized due to valuation, strong FCF, and tempered M&A cadence in Commercial/Residential; Food Processing remains M&A-rich, supporting spin rationale.
  • Tariff pass-through: Exposure ~70% CFS/20% Residential/10% FP; mid- to high-single-digit pricing from July 1 plus supply-chain/operational actions aim to be cost-neutral by end-2025; near-term margin pressure likely in 2H.
  • Demand outlook: Management refrained from point estimates; expects sequential improvements, with international openings weighted to 2H; Commercial gains from beverage/automation; Residential likely flat on the year but margin-resilient.
  • Food Processing cadence: Q1 weakness seen as timing; Q2 rebound expected; long-term multibillion-dollar pipeline intact.

Estimates Context

  • Q1 2025 vs S&P Global consensus: Adjusted/Normalized EPS $2.08 vs $1.97 (beat), revenue $906.6M vs $939.7M (miss), EBITDA (S&P) $175.2M vs $185.7M (miss). Values retrieved from S&P Global.*
  • Implications: Expect sell-side models to trim revenue and EBITDA, partly offset by higher buyback and stronger-than-expected Residential margin resilience; watch upward revisions to ASPs from July pricing and tariff offset timing.
Metric (Q1 2025)ConsensusActualDelta
Adjusted/Normalized EPS ($)1.97*2.08 +0.11
Revenue ($M)939.7*906.6 -33.1
EBITDA ($M, S&P)185.7*175.2*-10.5
Note: Asterisked values are from S&P Global.*

Key Takeaways for Investors

  • Revenue miss overshadowed by EPS beat: disciplined cost control and mix supported margins; however, tariff-driven 2H headwinds likely weigh near term until pricing/operational offsets flow through.
  • Capital return accelerates: with 2.0x leverage and strong FCF, management intends to deploy the vast majority of FCF to buybacks, a potential support for shares into tariff-choppy quarters.
  • Pricing power and competitive position: July 1 mid- to high-single-digit price actions, below many competitors, should underpin 2H margin recovery and share gains, especially given a U.S.-centric footprint.
  • Segment setup: Commercial should improve sequentially (beverage/automation wins), Residential likely flat but margin-stable, Food Processing to rebound in Q2 with long-term pipeline intact though 2025 growth may be constrained.
  • Spin catalyst: Food Processing separation remains on track for early 2026 with a Q4’25 investor day; potential multiple unlock should remain a medium-term re-rating driver.
  • Watch list: Tariff rulemaking cadence, pricing realization from July 1, international QSR openings (weighted to 2H), and the timing/scale of repurchases under the expanded authorization.

Footnote: Asterisked values are from S&P Global (consensus and actuals where shown).*