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Middleby (MIDD) Q2 Earnings Beat by a Penny, Revenues Miss

Zacks

Machinery behemoth, The Middleby Corporation MIDD reported mixed second-quarter 2017 results.

Quarter in Details

The company’s quarterly adjusted earnings (excluding the impact of restructuring expenses of 4 cents per share) came in at $1.39 per share, beating the Zacks Consensus Estimate by a penny. The bottom line also came in higher than the year-ago tally of $1.35 per share.

Net sales during the quarter came in at $579.3 million, marginally down 0.2% year over year. In addition, the top line missed the Zacks Consensus Estimate of $587 million. The company noted that though increased sales generated from the acquired businesses bolstered sales in the quarter, foreign currency translation adversely affected the same.


Segmental Details

Revenues from the Commercial Foodservice Equipment Group increased 4% on a year-over-year basis to $333.8 million.

Revenues from the Food Processing Equipment Group improved 10.7% year over year in the quarter to $92.4 million.

Revenues from the Residential Kitchen Equipment Group declined 13% year over year to $153.2 million.

Costs and Margins

Cost of sales in the quarter was $344.7 million compared to $347 million recorded in the year-ago quarter. Gross profit margin in the reported quarter came in at 40.5%, expanding 30 basis points (year over year). The upswing was stemmed by the successful restructuring activities of the AGA Group.

Selling, general and administrative expenses were $113 million, as against $115.2 million in the incurred year-ago period. Operating margin came in at 21.1%, advancing 180 bps year over year.

Balance Sheet

Middleby exited the second quarter with cash and cash equivalents of $64.9 million, as against $68.5 million recorded at the end of 2016. Long-term debt was $798.4 million compared with $726.2 million recorded as on Dec 31, 2016.

Outlook

This Zacks Rank #3 (Hold) company anticipates new product offerings under its Commercial Foodservice Equipment Group business segment to boost demand from restaurant chain customers. Furthermore, construction of new food processing facilities in the emerging economies, investments over industrial bakery brands, as well as opening of the company’s industrial baking center in Plano, TX will likely bolster revenues of the Food Processing Equipment Group business segment. Notably, superior customer services and product launches are also projected to improve the performance of

Residential Kitchen Equipment Group segment in the near term.

Stocks to Consider

Some better-ranked stocks in the industry are listed below;

AGCO Corporation AGCO, which sports a Zacks Rank #1 (Strong Buy) at present, generated an average positive earnings surprise of 39.70% over the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apogee Enterprises, Inc. APOG has an average positive earnings surprise of 3.42% for the last four quarters and currently carries a Zacks Rank #2 (Buy).

Deere & Company DE carries a Zacks Rank #2 and has a remarkable average positive earnings surprise of 70.41% for the past four quarters.

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