MIDDLEBY Corp

The Middleby Corporation operates in the commercial foodservice equipment and food processing equipment industries. The company believes the worldwide commercial foodservice equipment market has sales in excess of $35.0 billion ¹ and the global food processing equipment and packaging industry is estimated to be in excess of $70 billion ² worldwide. Key structural forces shaping competition include the development of new restaurant concepts, expansion into international markets, replacement and upgrade of existing equipment, menu changes, labor reallocation, and consumer food trends, as well as food processors' demands for greater product consistency, food safety, automation, and flexibility.

The company believes it is one of the largest multiple-line manufacturers of commercial kitchen and food processing equipment in the U.S. and worldwide. Among the company's major competitors to the Commercial Foodservice Equipment Group are the Ali Group S.r.l., Duke Manufacturing, AB Electrolux, Haier Group, Hoshizaki America, Inc., Hobart Corporation and Vulcan-Hart (subsidiaries of Illinois Tool Works Inc.), Marmon Foodservice Technologies (a Berkshire Hathaway Company), Midea Group, Panasonic Corporation, Rational AG, and SMEG S.p.A. Major competitors to the Food Processing Equipment Group include AMF Bakery Systems, Duravant, The GEA Group, JBT Marel Corporation, and ProMach. The company's stated competitive advantages include strong brand equity, exceptional product performance, short lead-times and timely delivery, competitive pricing, and superior customer service support.

The company generates revenue through the design, manufacture, marketing, distribution, and service of a broad line of foodservice equipment and food processing equipment. Revenue is recognized when control of promised goods or services is transferred to customers, either at a point in time or over time for long-term contracts within the Food Processing Equipment Group. The company's customer segments include quick-service restaurants, full-service restaurants, ghost kitchens, convenience stores, supermarkets, retail outlets, hotels, institutions, and food processors. The company's domestic sales are primarily through independent dealers and distributors, while international sales are made through a network of company-owned and local independent distributors and dealers.

The Commercial Foodservice Equipment Group has a broad portfolio of foodservice equipment serving virtually any cooking, warming, holding, refrigeration, freezing, and beverage application within a commercial kitchen or foodservice operation. Its leading portfolio of trade names includes Anets, APW Wyott, Bakers Pride, Beech Ovens, BKI, Blodgett, Blodgett Combi, Bloomfield, Blue Sparq, Britannia, Carter-Hoffmann, Celfrost, Concordia, CookTek, Crown, CTX, Desmon, Deutsche Beverage, Doyon, Emery Thompson, Eswood, EVO, Firex, Flavor Burst, Follett, Frifri, Globe, Goldstein, Holman, Houno, Hydra Rinse, Icetro, IMC, Imperial, Induc, Jade, JoeTap, Josper, Kloppenberg, L2F, Lang, Lincat, Marco, MagiKitch’n, Market Forge, Marsal, Marvel Scientific, Mercury, Middleby Marshall, Newton CFV, Nieco, Nu-Vu, Perfect Fry, Pitco, Powerhouse Dynamics, QualServ, RAM, Southbend, Ss Brewtech, Star, Starline, Sveba Dahlen, Synesso, Taylor, Terry, Toastmaster, TurboChef, U-Line Commercial, Ultrafryer, Varimixer, Viking Commercial, Wells, Wild Goose Filling, and Wunder-Bar. Net sales for this segment were $2,351.0 million ³ in fiscal 2025, compared to $2,380.4 million ⁴ in fiscal 2024. The segment's gross margin rate was 40.2% ⁵ in fiscal 2025, compared to 39.6% ⁶ in fiscal 2024.

The Food Processing Equipment Group offers a broad portfolio of processing solutions for customers producing protein products and bakery products. Its leading portfolio of trade names includes Alkar, Armor Inox, Auto-Bake, Baker Thermal Solutions, Burford, Colussi Ermes, Cozzini, CV-Tek, Danfotech, Drake, Escher, Filtration Automation, Frigomeccanica, GBT GmbH Bakery, Glimek, Gorreri, Hinds-Bock, Inline Filling Systems, JC Ford, Key-Log, Maurer-Atmos, Maxmac, MP Equipment, Oka, Pacproinc, Proxaut, RapidVisionPak, Scanico, Spooner Vicars, Stewart Systems, Sveba Dahlen, Thurne, and Vemac. Net sales for this segment were $850.2 million ⁷ in fiscal 2025, compared to $769.8 million ⁸ in fiscal 2024. The segment's gross margin rate was 36.3% ⁹ in fiscal 2025, compared to 39.7% ¹⁰ in fiscal 2024.

On December 4, 2025, the company entered into a partnership interest purchase agreement to sell a 51% ¹¹ stake in its Residential Kitchen Equipment Group to an affiliate of 26North Partners LP in a transaction valuing the business at $885 million ¹². The Residential Transaction was completed on February 2, 2026, and the company received net cash proceeds of approximately $565 million ¹³ and a $135 million ¹⁴ promissory note from the joint venture. On February 25, 2025, the company announced its intent to separate its Food Processing business through a spin-off. Over the past two years, the company completed seven acquisitions for an aggregate purchase price totaling $153.6 million ¹⁵, net of cash acquired. During fiscal 2025, the company repurchased $723.6 million ¹⁶ of Middleby common shares, comprised of $14.0 million ¹⁷ to repurchase 83,889 ¹⁸ shares for withholding taxes and $709.6 million ¹⁹ used to repurchase 4,911,050 ²⁰ shares under a repurchase program. The company also recognized non-cash impairments of $709.1 million ²¹ in the three month period ended September 27, 2025, primarily associated with goodwill and trademarks within the Residential Kitchen Equipment Group.

Net sales in fiscal 2025 increased by $51.0 million ²², or 1.6% ²³, to $3,201.2 million ²⁴ as compared to $3,150.2 million ²⁵ in fiscal 2024. Net earnings from continuing operations were $367.3 million ²⁶ in fiscal 2025, compared to $421.0 million ²⁷ in fiscal 2024. Diluted earnings per share from continuing operations were $7.04 ²⁸ in fiscal 2025, compared to $7.77 ²⁹ in fiscal 2024. Net loss was $277.7 million ³⁰ in fiscal 2025, compared to net earnings of $428.4 million ³¹ in fiscal 2024, driven by a loss from discontinued operations of $645.0 million ³² net of tax. Net cash provided by operating activities from continuing operations was $564.6 million ³³ in fiscal 2025, compared to $614.5 million ³⁴ in fiscal 2024.

The company is pursuing the separation of its Food Processing business through a spin-off into an independent publicly traded company, targeting completion in the second quarter of 2026, subject to certain customary conditions including final approval by the company's Board of Directors and the effectiveness of appropriate filings with the SEC. The spin-off is expected to be tax-free for U.S. federal income tax purposes. The company also completed the sale of a 51% ³⁵ stake in its Residential Kitchen Equipment Group to an affiliate of 26North Partners LP, valuing the business at $885 million ³⁶, and now owns a 49% ³⁷ non-controlling interest in a new standalone joint venture. The company continues to pursue acquisitions, having completed seven acquisitions over the past two years for an aggregate purchase price totaling $153.6 million ³⁸, net of cash acquired, adding brands to both the Commercial Foodservice Equipment Group and Food Processing Equipment Group.

The company's growth strategy includes developing innovations to solve challenges within customers' operations, with a focus on automated equipment that addresses labor issues and innovative equipment solutions including integrated IoT platforms and universal controllers. The company believes that the worldwide commercial foodservice equipment market has sales in excess of $35.0 billion ³⁹ and the global food processing equipment and packaging industry is estimated to be in excess of $70 billion ⁴⁰ worldwide. The company is developing innovations to address labor issues and allow restaurateurs to scale operations quickly and leverage data to make operational decisions to improve efficiency.

The gross margin rate decreased to 39.1% ⁴¹ in fiscal 2025 from 39.7% ⁴² in fiscal 2024, primarily related to product mix at the Food Processing Equipment Group and an adverse impact from tariffs. The company has been negatively impacted by inflation in wages, logistics, energy, raw materials and component costs, and has implemented price increases and pricing strategies to mitigate the impact of cost inflation on margins. The company continues to actively monitor costs. Restructuring expenses decreased $4.9 million ⁴³ to $3.3 million ⁴⁴ in fiscal 2025 from $8.2 million ⁴⁵ in fiscal 2024, related primarily to headcount reductions and facility consolidations within both segments.

The company continues to actively monitor global supply chain, labor and logistics constraints, which have had a negative impact on the company's ability to source parts and complete and ship units. The decreased availability of resources and inflationary costs have resulted in heightened inventory levels. To combat these pressures, the company has evaluated alternative sourcing, dual sourcing and collaborated across the organization. The company's capital resources have been and are expected to continue to be sufficient to address these challenges. As of January 3, 2026, 8,826 ⁴⁶ persons were employed by the company and its subsidiaries of continuing operations.

Capital expenditures for fiscal 2025 were $70.7 million ⁴⁷, primarily for upgrades of production equipment and manufacturing facilities. The company repurchased $723.6 million ⁴⁸ of Middleby common shares during fiscal 2025, including $709.6 million ⁴⁹ used to repurchase 4,911,050 ⁵⁰ shares under a repurchase program. As of January 3, 2026, 6,855,060 ⁵¹ shares remained authorized for repurchase under the stock repurchase program. The company does not currently pay cash dividends on its common stock and the Board of Directors does not intend to declare or pay cash dividends for the foreseeable future. Research and development costs were $58.8 million ⁵² in fiscal 2025, compared to $50.8 million ⁵³ in fiscal 2024.

The company faces headwinds from recent significant trade policy and tariff actions by the U.S. government and many other countries, which have created significant uncertainty and potential risks. The tariffs imposed to date have increased the cost of certain raw materials and components, and there can be no assurance of the company's ability to offset the impact of these tariffs fully. The imposition of retaliatory tariffs from other countries on the company's exported products could negatively affect demand and future sales volumes. The company has also been negatively impacted by inflation in wages, logistics, energy, raw materials and component costs, and consumer demand in the near term has and may continue to be impacted by higher inflation levels and uncertainty surrounding the Federal Reserve's future interest rate policy decisions.

The company's international operations are subject to risks including economic downturns, political instability, foreign trade restrictions, and currency fluctuations. The company anticipates that international sales will continue to account for a significant portion of consolidated net sales in the foreseeable future. An increase in the relative value of the U.S. dollar against foreign currencies would lead to a reduction in consolidated sales and earnings. The company's operations are also subject to the impact of higher energy costs, fluctuating interest rates, financial market volatility, inflation, recession, global hostilities and acts of terrorism.

The company has a significant amount of indebtedness, with $2.2 billion ⁵⁴ of borrowings and $4.5 million ⁵⁵ in letters of credit outstanding at January 3, 2026, which could adversely affect its business, results of operations and growth strategy. The company's balance sheet includes a significant amount of goodwill and indefinite life intangible assets, representing approximately 28% ⁵⁶ and 13% ⁵⁷, respectively, of its total assets as of January 3, 2026, and the company recognized non-cash impairments of $709.1 million ⁵⁸ in the three month period ended September 27, 2025, primarily associated with the Residential Kitchen Equipment Group. The company faces intense competition in the commercial foodservice and food processing equipment industries, with many competitors being substantially larger and enjoying substantially greater financial, marketing, technological and personnel resources. The company is subject to risks associated with developing products and technologies, which could delay product introductions and result in significant expenditures. The company depends on key customers for a material portion of its revenues, and changes in purchasing patterns or loss of one or more key customers could adversely impact operating results.

Management's message emphasizes the company's focus on delivering strong financial results and executing on its long-term strategy and profitability objectives, as well as continuing to identify operational efficiencies in all aspects of the business, even in light of headwinds from tariffs and inflation. Key strategic priorities include the separation of the Food Processing business through a spin-off into an independent publicly traded company, targeting completion in the second quarter of 2026, and the completed sale of a 51% ⁵⁹ stake in the Residential Kitchen Equipment Group to an affiliate of 26North Partners LP, which valued the business at $885 million ⁶⁰. Management also emphasizes the company's acquisition strategy, having completed seven acquisitions over the past two years for an aggregate purchase price totaling $153.6 million ⁶¹, net of cash acquired, to add to its portfolio of brands and technologies.