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MIDDLEBY Corp (MIDD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stable top-line and record profitability: revenue $1.014B, GAAP diluted EPS $2.07, adjusted EPS $2.88, and record Adjusted EBITDA $251M (24.8% margin) — the strongest margins of the year .
  • Food Processing was the standout: sales +14.4% to $219M with 29.6% adjusted EBITDA margin; Commercial and Residential declined modestly YoY but sustained strong margins (28.1% and 13.1%) .
  • Cash generation and balance sheet improved: Q4 operating cash flow $239.7M; FY operating cash flow $686.8M; net leverage reduced to 2.0x; Q4 buybacks $16.4M and ~$20M repurchased Q1-to-date .
  • Strategic pivot: Middleby will separate Food Processing via a tax‑free spin-off targeted for early 2026, creating two focused public companies (RemainCo: Commercial + Residential; SpinCo: Food Processing) .
  • 2025 outlook: company organic revenue growth expected low-single-digits; Food Processing mid-single digits; modest margin expansion; capex ~2% of revenue; Q1 organic revenue roughly flat with mixed segment dynamics (Commercial down slightly, Food Processing slightly down, Residential up) .

What Went Well and What Went Wrong

  • What Went Well

    • Record profitability and year-end margin strength: “We closed 2024 by delivering our strongest margins of the year…led us to record cash flow for the year.” (CEO) .
    • Food Processing momentum: Q4 organic growth +4.7% and adjusted EBITDA margin 29.6% (30.3% organic), with robust order pipeline and two acquisitions (JC Ford, Gorreri) broadening exposure to snack and baked-goods systems .
    • Cash conversion and deleveraging: CFO highlighted record FY free cash flow (~$640M) and ~140% FCF conversion, inventories down >$250M over two years, and net leverage at 2.0x .

  • What Went Wrong

    • Organic sales declined 1.3% in Q4, with Commercial -2.8% and Residential -2.4% amid challenged end markets .
    • $38.6M of Q4 impairment (primarily Residential tradenames), though lower than $78.1M in prior-year Q4 .
    • Chain customer project timing remains a headwind near-term; management expects a “slow start” in Commercial for Q1 and Food Processing Q1 organic slightly down due to project timing .

Financial Results

Quarterly trend (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$991.5 $942.8 $1,013.9
GAAP Diluted EPS ($)$2.13 $2.11 $2.07
Adjusted EPS ($)$2.39 $2.33 $2.88
Adjusted EBITDA ($USD Millions)$216.4 $213.0 $251.2
Adjusted EBITDA Margin %21.8% 22.6% 24.8%
Operating Margin % (GAAP)17.7% 18.4% 16.8%

YoY comparison (Q4 2023 vs Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$1,008.6 $1,013.9
GAAP Diluted EPS ($)$1.42 $2.07
Adjusted EPS ($)$2.65 $2.88
Gross Margin %38.4% 38.4%
Operating Income ($USD Millions)$114.6 $169.9
Operating Margin %11.4% 16.8%
Adjusted EBITDA ($USD Millions)$235.2 $251.2
Adjusted EBITDA Margin %23.3% 24.8%
Cash from Operations ($USD Millions)$255.7 $239.7
Free Cash Flow ($USD Millions)$240.2 $229.1
Impairments ($USD Millions)$78.1 $38.6

Segment breakdown (Q4)

Segment Net Sales ($USD Millions)Q4 2023Q4 2024
Commercial Foodservice$627.9 $609.4
Residential Kitchen$189.0 $185.0
Food Processing$191.7 $219.4
Segment Adjusted EBITDA Margin %Q4 2023Q4 2024
Commercial Foodservice28.6% 28.1%
Residential Kitchen10.4% 13.1%
Food Processing27.6% 29.6%

KPIs

KPI (Q4 unless noted)Value
Operating Cash Flow ($M)$239.7
Free Cash Flow ($M)$229.1
Net Leverage2.0x
Net Debt (End of Q4)~$1.7B
Share Repurchases$16.4M in Q4; ~$20M Q1-to-date
LTM Bank EBITDA ($M)$893.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Co. Organic Revenue GrowthFY 2025Not providedLow single digits New
Commercial Organic Revenue GrowthFY 2025Not providedAt least low single digits New
Residential Organic Revenue GrowthFY 2025Not providedAt least low single digits; meaningful YoY growth in Q1 New
Food Processing Organic Revenue GrowthFY 2025Not providedMid-single digits New
Total Co. Margin OutlookFY 2025Not providedModest margin expansion New
Food Processing MarginFY 2025Not providedBaseline ~24% post-acquisitions; likely below 2024’s strong level during integration New
Q1 Revenue (Total)Q1 2025Not providedModest YoY growth; organic generally flat New
Q1 Segment OutlookQ1 2025Not providedCommercial down slightly; Food Processing slightly down (timing); Residential up New
CapexFY 2025Not provided~2% of revenue New
Share RepurchasesFY 2025Not providedContinue at current pace; potentially ~20% of cash flow New
Spin TimelineCorporateN/ATax‑free spin of Food Processing targeted early 2026 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Automation/IoT/TechFocus on “product innovations” and “go-to-market” despite macro challenges Open Kitchen IoT connected across live equipment; new fryer profitability analytics tool; multiple NAFEM innovations Increasing adoption and product cadence
Supply Chain & TariffsNavigated supply chain; macro headwinds cited in Q3 Well positioned vs tariffs; near-shoring, supplier diversification; resilient network across 120 brands Improving resilience; savings expected in 2025
Macro/Restaurant Traffic & ChainsLower traffic, higher food costs, delays/closures pressured CFS in Q3 Chain 2025 build plans up vs 2024; beverage layers accelerating; Europe momentum; traffic patterns improving exiting 2024 Gradual improvement through 2025
Residential MarketConditions challenged; still executing profitability actions At cyclical trough; expect gradual 2025 recovery; incrementals >40% as volumes rebuild Turning from trough
Portfolio Actions/M&ANo spin; ongoing acquisitions (Emery Thompson in Q3) JC Ford and Gorreri acquired; announced intent to spin Food Processing by early 2026 Accelerating portfolio evolution
Regional TrendsLimited prior detailInternational grew in Q4; Europe strong; new Munich innovation kitchen in 2025 International strengthening

Management Commentary

  • “We closed 2024 by delivering our strongest margins of the year…led us to record cash flow for the year.” — Tim FitzGerald, CEO .
  • “Our Board…approved a plan to separate our food processing business into a stand‑alone separate public company…expected to be completed by early 2026.” — CEO (prepared remarks) .
  • “Adjusted EBITDA of $866 million at a 22.4% margin…Q4 GAAP EPS $2.07, adjusted EPS $2.88…Operating cash flows were $687 million for the year, with free cash flow conversion of 140%.” — Bryan Mittelman, CFO .
  • “Open Kitchen is quickly driving to become the IoT for the Commercial Foodservice industry…introducing a new fryer profitability tool to optimize oil usage and waste.” — James K. Pool .

Q&A Highlights

  • Spin rationale/structure: Focus and valuation unlock with minimal dis-synergies due to decentralized model; Food Processing to carry less leverage; RemainCo retains M&A capacity .
  • Residential trajectory: At cyclical trough; expect gradual recovery; structural improvements drive incrementals >40% as volumes return .
  • Commercial growth cadence: Slow start in Q1; sequential improvement through the year; 2025 chain build plans up vs 2024 .
  • Pricing vs volume: 2025 expected to be more volume-driven than price .
  • Supply chain/tariffs: Near-shored supply base and diversified suppliers support savings and competitive positioning in 2025 .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/Revenue/EBITDA was unavailable due to data access limits at query time; as a result, beat/miss analysis versus consensus cannot be provided at this time. If desired, we can refresh and update this section when S&P Global access is available.

Key Takeaways for Investors

  • Food Processing is the growth and margin engine near-term; Q4 strength plus JC Ford/Gorreri integration underpin mid‑single‑digit organic growth in 2025 despite a softer Q1 start .
  • Commercial held margins >28% on lower volumes, and management sees sequential improvement in 2025 as chain openings normalize and beverage/ice platforms scale — a potential narrative shift if order timing improves .
  • Residential appears past the worst; profitability initiatives lifted Q4 margin to 13.1%, and management expects >40% incrementals as volumes recover — a medium‑term earnings lever .
  • Balance sheet flexibility (2.0x leverage, ~$3.1B availability) supports ongoing buybacks (~20% of 2025 cash flow) and targeted M&A, particularly in ice/beverage and tech .
  • The Food Processing spin (early 2026 target) is a multi‑quarter catalyst that can unlock valuation for two focused entities and sharpen capital allocation priorities .
  • 2025 setup: low-single‑digit organic growth and modest margin expansion at the total company; Q1 seasonal/contract timing dynamics are a watch item, but sequential growth is expected across all segments as the year progresses .

Additional detail and source references:

  • Q4 2024 8‑K and press release with full financials .
  • Q4 2024 earnings call transcript (spin, outlook, segment color) .
  • Prior quarters for trend analysis: Q3 2024 press/8‑K ; Q2 2024 press release .
  • Spin-off press release (transaction overview and timing) .