The Middleby Corporation (MIDD Quick QuoteMIDD - Free Report) reported first-quarter 2024 adjusted earnings of $1.89 per share, which missed the Zacks Consensus Estimate of $2.04. The bottom line decreased 14.1% year over year due to lower sales.

Net sales of $927 million missed the consensus estimate of $977 million. The top line dipped 8% year over year. Organic revenues in the reported quarter decreased 8.7%. Acquired assets boosted sales by 0.4% while movements in foreign currencies also had a positive impact of 0.4%.

Segmental Results

Sales from the Commercial Foodservice Equipment Group segment (representing 63.7% of net sales) were $590.3 million, down 3.8% year over year. Our estimate was $610.8 million. Organic sales in the reported quarter decreased 4.2%. Buyouts and foreign-currency translation had a positive impact of 0.2%, each on sales.

Sales from the Residential Kitchen Equipment Group segment (18.7%) totaled $173.9 million, down 21% year over year. Results were hurt by weakness in residential kitchen industry. Organic sales plunged 22.3%. Buyouts boosted sales by 0.5% while favorable foreign currency movements had a positive impact of 0.9%.

Sales from the Food Processing Equipment Group segment (17.6%) summed $162.7 million, down 6.2% year over year. We suggested the metric to be $174.4 million. Organic sales decreased 7.7% year over year. Acquisitions boosted sales 1% while foreign currency movements had a favorable impact of 0.4%.

Margin Profile

Middleby’s cost of sales decreased 7.7% year over year to $580.6 million. Gross profit fell 8.5% to $346.4 million. The gross margin contracted to 37.4% from 37.6% in the year-ago quarter.

Selling, general and administrative expenses decreased 4.4% year over year to $206 million. Operating income in the first quarter declined 14.8% year over year to $137.1 million. Operating margin decreased 120 basis points (bps) to 14.8% in the reported quarter.

Adjusted EBITDA declined 11.9% year over year to $185.8 million. Adjusted EBITDA margin fell 90 bps to 20% in the quarter.

Balance Sheet and Cash Flow

Exiting the first quarter, Middleby had cash and cash equivalents of $341 million compared with $247.5 million at the end of December 2023. Long-term debt was $2.37 billion at the end of the first quarter compared with $2.38 billion at 2023-end.

In the first three months of 2024, Middleby generated net cash of $140.9 million from operating activities compared with $92 million a year ago. Capital expenditure totaled $13.7 million compared with $25.5 million in the prior-year quarter. Free cash flow was $127.2 million in the first three months of 2024 compared with $66.5 million in the year-earlier quarter.

Zacks Rank and Key Picks

MIDD currently carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the Zacks Industrial Products sector:

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The Zacks Consensus Estimate for LXFR’s 2024 earnings has remained stable in the past 60 days.

Crane Company (CR Quick QuoteCR - Free Report) presently carries a Zacks Rank of 2 (Buy). It delivered a trailing four-quarter average earnings surprise of 15.2%.

In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.3%.

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In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 0.6%.