Middleby Beats Q2 Earnings and Revenues on Acquisitions

Zacks

The Middleby Corporation (MIDD) reported improved year-over-year results for the second quarter of 2014. Earnings came in at 85 cents per share, up roughly 26.9% from 67 cents in the year-ago quarter, driven by improved revenues and margins. Moreover, earnings surpassed the Zacks Consensus Estimate of 78 cents by 9%.

Revenues: Revenues grew 16.8% year over year to $424.8 million, beating the Zacks Consensus Estimate of $410.0 million. The rise in sales was primarily attributable to the company’s inorganic growth. Excluding the acquisitions, sales increased 11% year over year.

Revenues from the Commercial Foodservice Equipment Group rose 18.3% year over year to $263.9 million. However, excluding the impact of Celfrost, Wunder-Bar and Market Forge acquisitions, the same increased 10.2%.

Revenues from the Food Processing Equipment Group rose 9.8% year over year to $89.9 million in the reported quarter. Excluding the acquisitions, sales increased 6.2% year over year.

The Residential Kitchen Equipment Group’s revenues were $70.9 million, recording a hike of 20.6% year over year.

Costs/Margins: Middleby’s cost of sales in the quarter increased 13.8% year over year to $258.6 million, representing 60.9% of total revenue. Owing to higher sales volume and improvements in the Viking business, gross margin increased to 39.1% from 37.5%.

Selling and distribution expenses, as a percentage of revenues, increased 70 basis points (bps) year over year to 11.3%, while general and administrative expenses decreased 30 bps to 10% of total revenue. Operating profit rose 25.6% year over year to $75.7 million, against $60.3 million recorded in the prior-year quarter.

Balance Sheet: Middleby Corporation had cash and cash equivalents of approximately $32.3 million at the end of second-quarter 2014, versus $39.1 million in the preceding quarter. Long-term debt was $584.5 million, compared with $648.5 million at the end of first-quarter 2014.

Outlook: Middleby hopes to record higher sales on the back of organic as well as inorganic growth going forward. The company intends to spend on the marketing of new products as well as on the training of dealer sales organization. Middleby also expects to benefit from the Viking acquisition in the coming quarters.

Other Stocks to Consider

Middleby currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Blount International Inc. (BLT), The Babcock & Wilcox Company (BWC) and DXP Enterprises, Inc. (DXPE). While both Blount International and The Babcock & Wilcox Company  sport a Zacks Rank #1 (Strong Buy), DXP Enterprises holds a Zacks Rank #2 (Buy).

Read the Full Research Report on BWC
Read the Full Research Report on DXPE
Read the Full Research Report on ^MIDD
Read the Full Research Report on BLT


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