The Middleby Corporation (MIDD) Q4 2020 earnings summary

Executive summary

• FY2020 results reflected COVID-19 disruption: net sales fell 15.1% YoY to $2,513.3M; net earnings were $207.3M and diluted EPS was $3.76.

• Commercial Foodservice was hardest hit, while Food Processing grew organically and Residential Kitchen demand strengthened in the second half.

Financial highlights

• Gross profit fell to $882.0M from $1,103.5M; gross margin declined to 35.1% from 37.3%. Excluding acquisitions and FX, 2020 gross margin was 35.3%.

• Operating income declined to $324.4M from $514.0M; operating margin was 12.9% vs. 17.4%. Net earnings were $207.3M vs. $352.2M; diluted EPS was $3.76 vs. $6.33.

• Operating cash flow increased to $524.8M from $377.4M; cash and equivalents were $268.1M at Jan. 2, 2021, up from $94.5M a year earlier.

• SG&A decreased to $531.9M from $593.8M, but rose to 21.2% of sales from 20.1%; reductions in compensation and controllable costs offset acquisition and credit-loss allowance costs.

Outlook and guidance

• Demand and production levels were anticipated to continue recovering, while the near-term COVID-19 impact remained uncertain.

• Cash from operations, cash on hand and $2.0B of remaining Credit Facility capacity were expected to cover working capital and cash needs and support covenant compliance for at least 12 months.

• Commercial Foodservice restructuring actions were expected to deliver annual savings of $20.0M; savings realization began in 2020, with initiatives substantially complete by FY2021-end.