The Middleby Corporation (MIDD) reported impressive results for the fourth quarter of 2013. Earnings per share came in at $2.62, up roughly 29.1% from $2.03 in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of $2.23 by 17.5%. The increase in earnings was due to improved revenues and margins.
For 2013, Middleby reported earnings per share of $8.21, up 26.5% year over year. Reported earnings also beat the Zacks Consensus Estimate of $8.02 per share.
Revenues: Revenues generated by Middleby increased 29.4% year over year to $377.4 million, marginally beating the Zacks Consensus Estimate of $376.0 million. The rise in sales was primarily a result of the company’s inorganic growth. Excluding the acquisitions, sales increased 8.6% year over year.
In the reported quarter, revenues from the Commercial Foodservice Equipment Group rose 14.7% year over year. However, the same increased 12.6% excluding the impact of the acquisitions of Nieco, Celfrost and Wunder-Bar.
Revenues from the Food Processing Equipment Group declined 2.2% year over year in the reported quarter as large orders were included in the fourth quarter of 2012.
The Residential Kitchen Equipment Group’s revenues were $56.2 million in the quarter.
For 2013, Middleby reported revenues of $1.4 billion, up from $1.0 billion recorded in 2012 and almost in line with the Zacks Consensus Estimate.
Costs/Margins: Middleby’s cost of sales in the quarter increased 27.1% year over year to $226.7 million, which represented 60.1% of total revenue. Gross margin increased to 39.9% from 38.8%, due to the increase in sales.
Selling and distribution expenses, as a percentage of revenues, increased 120 basis points (bps) year over year to 10.4%, while general and administrative expenses increased 30 bps to 9.9% of total revenue. Operating profit surged 26.9% year over year to $74.5 million, against $58.7 million recorded in the fourth quarter of 2012.
Balance Sheet: Middleby Corporation had cash and cash equivalents balance of approximately $36.9 million at the end of fourth-quarter 2013 versus $29.4 million in the preceding quarter. Long-term debt was $570.2 million, compared with $536.6 million in the end of the third quarter of 2013.
Outlook: Middleby anticipates continuing inorganic growth in the coming quarters. Acquisitions of Viking, Celfrost, Wunder-Bar and Market Forge are anticipated to significantly boost the results. Additionally, increased demand for pre-cooked and pre-processed foods in emerging markets is likely to work in Middleby’s favor.
Other Stocks to Consider
Middleby currently carries a Zacks Rank #2 (Buy). Other stocks to watch out for in the industry include Altra Industrial Motion Corp. (AIMC), Graco Inc. (GGG) and Xylem Inc. (XYL). All these stocks hold the same Zacks Rank as Middleby.
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