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Middleby (MIDD) Misses on Q1 Earnings & Revenue Estimates

Zacks

Machinery behemoth The Middleby Corporation MIDD reported weaker-than-expected results for first-quarter 2018.

Earnings and Revenues

Quarterly adjusted earnings came in at $1.18 per share, beating the Zacks Consensus Estimate of $1.39. However, the bottom line came in lower than the year-ago tally of $1.26 per share. Middleby stated that the ongoing restructuring expenses hurt the company’s earnings in the reported quarter.

Net sales in the quarter came in at $584.8 million, surpassing the Zacks Consensus Estimate of $603 million. In addition, the figure improved 10.3% year over year, driven by acquisition benefits, the Accounting Standards Codification 606 adoption, and favorable foreign currency-translation impact.

Segmental Break-Up

Net sales of the Commercial Foodservice Equipment Group were up 15.3% year over year to $359.9 million. Also, the Food Processing Equipment Group’s revenues climbed 14.6% year over year to $88.6 million in the quarter.

However, the Residential Kitchen Equipment Group revenues dipped 3.2% to $136.3 million in the reported quarter.

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 first quarter was $373.2 million compared to $320.8 million recorded in the year-ago quarter. Gross profit margin in the quarter came in at 36.2%, shrinking 330 basis points (bps) year over year. Gross margin slipped in the quarter due to reduced margins resulting from acquired businesses, unfavorable mix of the Food Processing Equipment segment and lesser volumes.

Selling, general and administrative expenses totaled $122.9 million, as against $115 million incurred in the year-ago period. Operating margin came in at 14.9%, contracting 260 bps year over year.

Balance Sheet

Middleby exited the first quarter with cash and cash equivalents of $103.3 million, as against $89.7 million recorded at the end of 2017. Long-term debt was $1,043.9 million compared with $1,023.7 million recorded as of Dec 31, 2017.

Operating cash flow for the first quarter was $44.7 million versus $46.9 million posted in the year-ago quarter.

Outlook

Middleby expects that the recently-made acquisitions will continue to boost its revenues and profitability in the upcoming quarters. This Zacks Rank #3 (Hold) company believes the restructuring moves and product launches will also help strengthen its competency.

Stocks to Consider

Some better-ranked stocks in the same space are listed below:

Applied Industrial Technologies, Inc. AIT sports a Zacks Rank #1 (Strong Buy). The company’s earnings per share (EPS) are predicted to be up 12% in the next three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.

Graco Inc. GGG also flaunts a Zacks Rank of 1. The company’s EPS is estimated to rise 10.33%, over the next three to five years.

Atlas Copco AB ATLKY holds a Zacks Rank #2 (Buy). The company’s EPS will likely be up 12.50%, during the same time frame.

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