Middleby's (MIDD) Q4 Earnings Meet, Revenues Miss Estimates

Machinery behemoth The Middleby Corporation (NASDAQ:MIDD) reported moderate fourth-quarter 2017 results.

Earnings and Revenues

Quarterly adjusted earnings came in at $1.48 per share, in line with the Zacks Consensus Estimate. However, the bottom line came in higher than the year-ago tally of $1.44 per share.

Adjusted earnings for 2017 came in at $6.16 per share, outpacing the Zacks Consensus Estimate of $5.39. Also, the bottom line came in higher than the year-ago figure of $5.10 per share.

Net sales in the reported quarter came in at $632.9 million, up 6% year over year. However, the top line missed the Zacks Consensus Estimate of $647 million. The upswing was backed by favorable foreign currency-translation impact and acquisition benefits.

Net sales of Commercial Foodservice Equipment Group were up 13.7% year over year. However, revenues of the Food Processing Equipment and Residential Kitchen Equipment Groups slipped 1.8% and 5% respectively.

Net sales for full-year 2017 came in at $2,34 billion, up 3% year over year, missing the Zacks Consensus Estimate of $2.35 billion by a whisker.

The Middleby Corporation Price, Consensus and EPS Surprise

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

Costs and Margins

Cost of sales in the fourth quarter was $392.7 million compared to $357.6 million recorded in the year-ago quarter. Gross profit margin in the quarter came in at 37.9%, shrinking 220 basis points (bps) year over year. Gross margin dipped in the quarter due to reduced margins secured from acquired businesses.

Selling, general and administrative expenses totaled $110.8 million, as against $110.3 million incurred in the year-ago period. Operating margin came in at 10.9%, contracting 1030 basis points (bps) year over year.

Gross margin for the year was 39.1%, as against 39.7% recorded in the comparable period last year. Operating margin for 2017 came in at 17.6%, as against 19.7% recorded in the year-ago period.

Balance Sheet

Middleby exited the fourth quarter with cash and cash equivalents of $89.7 million, as against $68.5 million recorded at the end of 2016. Long-term debt was $1,023.7 million compared with $726.2 million recorded as of Dec 31, 2016.

Operating cash flow for 2017 was $304.5 million versus $294.1 million recorded in 2016.

During 2017, Middleby repurchased shares worth $239.8 million and deployed $300.2 million capital for acquisitions.

Outlook

This Zacks Rank #2 (Buy) company believes elevated demand for chain-restaurant customers will bolster revenues of its Commercial Foodservice Equipment Group. In addition, sturdy demand for the recently-launched products and solutions is anticipated to drive revenues of the Food Processing Equipment and Residential Kitchen Equipment Groups in the near term.

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