The Middleby Corporation (MIDD) Q4 2017 earnings summary

Executive summary

• FY17 net sales rose 3.0% to $2.336B, primarily on acquisitions; excluding acquisitions and FX, sales declined 3.6%.

• Net earnings increased to $298.1M and diluted EPS to $5.26, while reported operating income fell to $410.3M amid restructuring costs and a $58.0M intangible impairment.

Financial highlights

• Net sales were $2,335.5M vs. $2,267.9M in FY16; gross profit was $912.7M vs. $901.2M.

• Net earnings were $298.1M vs. $284.2M; diluted EPS was $5.26 vs. $4.98.

• Operating income was $410.3M vs. $446.2M; excluding restructuring, the plant-sale gain and intangible impairment, operating income was $476.3M vs. $456.7M.

• Operating cash flow was $304.5M vs. $294.1M; cash and cash equivalents ended FY17 at $89.7M.

Outlook and guidance

• 2017 restructuring actions were estimated to yield annual savings of $10.0M in Commercial Foodservice, $4.0M in Food Processing and $20.0M in Residential Kitchen; savings realization began in 2017 and was expected to continue through H1 2018.

• Management expected operating cash flows and available borrowing to cover working capital, capital expenditures and debt amortization for the foreseeable future.

• Commercial Foodservice, Food Processing and Residential Kitchen backlogs of $105.2M, $61.6M and $35.0M, respectively, were all expected to ship during 2018.