ELGIN, Ill. - The Middleby (NASDAQ:MIDD) Corporation (NASDAQ:MIDD), a global leader in the commercial foodservice equipment industry, reported mixed financial results for the fourth quarter of 2023. The company's earnings per share (EPS) for the quarter were $2.65, surpassing the analyst estimate of $2.46 by $0.19. However, revenue fell short of expectations, coming in at $1.01 billion against the consensus estimate of $1.02 billion.
Despite the revenue miss, Middleby achieved record adjusted EBITDA of $235 million for the quarter, a 1% increase YoY. The company also reported a record year-to-date adjusted EBITDA of $900 million, marking a 6% rise YoY. Operating cash flows reached a record $256 million for the quarter and $629 million for the year. Middleby's profitability grew, with an organic adjusted EBITDA margin of 23.6% compared to 22.6% in the prior year.
Tim FitzGerald, CEO of Middleby, expressed pride in the team's achievements in 2023, highlighting the year of record EBITDA and strides towards long-term profitability goals. "We generated record cash flows for the year, while making meaningful strategic investments in our operations, sales and marketing capabilities, and our industry-leading product innovations," said FitzGerald.
However, net sales decreased by 2.2% YoY in the fourth quarter, with organic net sales (a non-GAAP measure) reporting decreases across all segments. The company's operating income for the quarter included $78.1 million of impairment charges associated with tradenames primarily within the Residential Kitchen Equipment Group. Foreign exchange losses were approximately $4.0 million in the fourth quarter, negatively impacting adjusted earnings per share by $0.06.
Following the earnings release, Middleby's stock experienced a slight decline of 0.4%, indicating a relatively neutral market response to the mixed results.
Middleby enters 2024 with a strong financial position, with net leverage reduced to less than 2.5x. The company's net debt at the end of the fiscal fourth quarter amounted to $2.2 billion, down from $2.6 billion at the end of fiscal 2022. The company's borrowing availability at the end of the fourth quarter was approximately $2.8 billion.
Looking forward, Middleby is focused on strengthening its foodservice platforms through organic growth initiatives and strategic acquisitions, including the recent acquisition of GBT GmbH Bakery Technology. The company is also gearing up for the Kitchen & Bath Industry Show, where it will launch a record number of new products.
The financial information presented in this article is based on the company's press release and does not include any forward-looking statements or projections.
InvestingPro Insights
The Middleby Corporation (NASDAQ:MIDD) has shown resilience despite a challenging fiscal year, as reflected in its recent earnings report. The company's ability to surpass EPS estimates while grappling with a slight revenue shortfall is noteworthy. A deeper dive into the company's financial health through InvestingPro data and tips offers a comprehensive picture for investors seeking to understand Middleby's position in the market.
InvestingPro data highlights a robust market capitalization of $7.73 billion, with a Price/Earnings (P/E) ratio of 17, indicating that the stock may be reasonably valued compared to its earnings. The company's revenue for the last twelve months as of Q3 2023 stood at approximately $4.06 billion, with a growth rate of almost 5%. This suggests that Middleby has been able to increase its revenue steadily, albeit at a moderate pace. Additionally, the company's gross profit margin remains strong at 37.5%, a testament to its operational efficiency.
From an investor's perspective, the InvestingPro Tips provide further insights. Middleby boasts a perfect Piotroski Score of 9, signaling strong financial health. This is particularly relevant as the company navigates market fluctuations and invests in strategic growth initiatives. Moreover, the stock's price movements have been quite volatile, which could present opportunities for investors with a higher risk tolerance. It's also reassuring to note that Middleby's liquid assets exceed its short-term obligations, providing a cushion for potential economic headwinds.
For investors looking to delve deeper into Middleby's financial nuances, there are additional InvestingPro Tips available at https://www.investing.com/pro/MIDD. These tips include predictions from analysts on company profitability this year and a record of profitability over the last twelve months. It's also worth noting that Middleby does not pay a dividend, which could influence the investment strategies of income-focused investors.
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