2024
T H I S I S M I D D L E B Y
Innovation Empowering Foodservice
A N N U A L R E P O R T
NET SALES
(dollars in billions)
(dollars in thousands)
2024 FINANCIAL HIGHLIGHTS
NET EARNINGS
(dollars in millions)
2024
2023
2022
2021
2020
NET SALES
$3,875,162
$4,036,605
$4,032,853
$3,250,792
$2,513,257
GROSS PROFIT
$1,470,369
$1,534,062
$1,446,554
$1,194,860
$882,048
INCOME FROM OPERATIONS
$656,188
$634,868
$639,604
$629,992
$324,431
NET EARNINGS
$428,433
$400,882
$436,569
$488,492
$207,294
EPS ON NET EARNINGS
$7.90
$7.41
$7.95
$8.62
$3.76
WEIGHTED AVERAGE SHARES
54,209,000
54,086,000
54,947,000
56,665,000
55,136,000
CASHFLOW FROM OPERATIONS
$686,816
$628,790
$332,552
$423,399
$524,785
TOTAL ASSETS
$7,283,151
$6,906,692
$6,874,866
$6,383,598
$5,202,474
TOTAL DEBT
$2,395,067
$2,425,195
$2,722,324
$2,414,294
$1,729,596
$.4.2
4.0
3.8
3.6
3.4
3.2
3.0
2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0
.8
.6
.4
.2
0
$500
400
300
200
100
0
EPS ON NET EARNINGS
$9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0
$3.76
$8.62
$7.95
$7.41
$7.90
$428
$3.9
$207
$488
$437
$401
$2.5
$3.3
$4.0
$4.0
'24
'23 '22 '21
'20
'24
'23 '22 '21
'20
'24
'23 '22 '21
'20
D E A R S H A R E H O L D E R S
In 2024, Middleby further strengthened its market
position in all three of its industry leading foodservice
businesses. We are accelerating the pace of our
market-leading innovations, as we continue to
transform our go-to-market capabilities, deepening
our engagement with customers and channel partners.
We are realizing the benefits of leveraging scale and
synergies across our operations and brand portfolios,
all with a focus on driving sustainable long-term
profitable growth.
We delivered strong profitability and record
cashflow for the year, achieving solid margins in
our Commercial Foodservice and Food Processing
platforms. Our Residential Kitchen business continues
to gain momentum, finishing the year strong, despite
challenging market conditions. With our businesses
better positioned than ever, we are excited about the
opportunities ahead.
Food Processing Separation
In early 2025 the Middleby Board of Directors
unanimously approved a plan to separate our Food
Processing segment into a standalone public company.
This action will create two independent and innovative
leaders: The Middleby Corporation and Middleby Food
Processing. The separation will be executed through
a tax-free spin-off and is expected to be completed in
early 2026.
We are proud of what we have accomplished, building
Middleby Food Processing into an industry leading
best-in-class equipment provider to the bakery
and protein industries. This business has grown
consistently over the past decade. In 2024, we posted
another record year of revenues and EBITDA, and the
timing is right for it to flourish on its own. Middleby
Food Processing is a full-line solutions provider of
choice, with premium brands that generate attractive
returns on investments for its customers. In addition
to filling end-to-end capabilities, there are attractive
market expansion opportunities into adjacent areas
such as poultry and snack food. With a successfully
proven acquisition track record, we are excited about
the Middleby Food Processing prospects to further
scale the platform both organically and through
strategic additions.
Commercial Foodservice
In our Commercial Foodservice business, Middleby
brands lead the markets we serve as we continue
to develop the most innovative industry solutions.
With a record number of new product launches, we
are pleased that many our innovations have received
industry awards and recognitions. While still in early
stages of market introduction, these recently debuted
products are gaining traction in the marketplace. We
are leading the way in automation, ventless kitchens,
electrification, digital technologies, and Internet of
Things (IoT) connectivity in the commercial kitchen
and expect increasing demand for these advanced
technologies. We continue to be at the forefront of
addressing the evolving needs and growing challenges
of the food service industry.
We are also expanding our presence in the commercial
kitchen, by effectively entering new adjacent markets,
including ice and beverage. While this part of our
business is in early chapters, we have seen it expand
rapidly in revenues and profitability. This new and
exciting complement to our foodservice business is
uniquely positioned to capture fast-emerging trends
across many of our existing customer channels with
meaningful growth opportunities in the years ahead.
Residential Kitchen
In Residential Kitchen we made great strides
progressing our business and unique portfolio of
premium brands against a challenging industry
backdrop. In 2024, we invested in marketing strategies,
launched new products and advanced operational
initiatives that we are confident will drive higher
profitability and future growth opportunities.
Our go-to-market investments in our showrooms,
culinary teams, and new digital capabilities ensure our
brands are fully represented across all sales channels.
These efforts resulted in heightened awareness within
the residential designer communities and the builder
and specifier markets while they strengthened our
relationships with dealer partners. We also leveraged
technologies across our product platforms to more
quickly meet the needs of our customers.
Introducing new products to the residential market
continues to be a priority, and one of many was the
much-anticipated Viking RVL series with connected
cooking capabilities. We are proud that our premium
products have received recognition for their advanced
innovation and stunning design features. The Middleby
Residential brands are recognized and respected
worldwide, which continues to strengthen our
connection with customers.
Thank you, shareholders, for your support. We are
proud of our achievements and the steadfast dedication
of our team, which is deeply committed to our future
growth and delivering shareholder value.
Sincerely,
Tim FitzGerald
Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the Fiscal Year Ended December 28, 2024
or
☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File No.1-9973
THE MIDDLEBY CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware
36-3352497
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification Number)
1400 Toastmaster Drive, Elgin,
Illinois
60120
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(847)
741-3300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
MIDD
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý
No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ¨
No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ý
No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definition of “accelerated filer," "large accelerated filer," "smaller reporting company," and
"emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒Accelerated filer
☐Non-accelerated filer
☐Smaller reporting company
☐
Emerging growth
company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ý
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ý
The aggregate market value of the voting stock held by nonaffiliates of the Registrant as of June 29, 2024 was approximately 6,514,462,779.
The number of shares outstanding of the Registrant’s class of common stock, as of February 24, 2025, was 53,624,590 shares.
Documents Incorporated by Reference
Part III of Form 10-K incorporates by reference the Registrant’s definitive proxy statement to be filed pursuant to Regulation 14A in
connection with the 2025 annual meeting of stockholders.
THE MIDDLEBY CORPORATION
DECEMBER 28, 2024
FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
PART I
Item 1.
Business
1
Item 1A.
Risk Factors
11
Item 1B.
Unresolved Staff Comments
22
Item 1C.
Cybersecurity
22
Item 2.
Properties
24
Item 3.
Legal Proceedings
26
Item 4.
Mine Safety Issues
26
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
27
Item 6.
[Reserved]
28
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
29
Item 7A.
Quantitative and Qualitative Disclosure about Market Risk
42
Item 8.
Financial Statements and Supplementary Data
43
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
88
Item 9A.
Controls and Procedures
88
Item 9B.
Other Information
90
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
90
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
90
Item 11.
Executive Compensation
90
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
90
Item 13.
Certain Relationships and Related Transactions, and Director Independence
90
Item 14.
Principal Accountant Fees and Services
90
PART IV
Item 15.
Exhibit and Financial Statement Schedule
91
Item 16.
Form 10-K Summary
93
PART I
Item 1. Business
General
The Middleby Corporation, a Delaware corporation (“Middleby” or the “company”), through its operating subsidiary Middleby
Marshall Inc., a Delaware corporation (“Middleby Marshall”) and its subsidiaries, is a leader in the design, manufacture,
marketing, distribution, and service of a broad line of (i) foodservice equipment, integrated IoT solutions and universal
controllers used in all types of commercial restaurants and institutional kitchens, (ii) food preparation, cooking, baking, chilling
and packaging equipment for food processing operations, and (iii) premium kitchen equipment including ranges, ovens,
refrigerators, ventilation, dishwashers and outdoor cooking equipment primarily used in the residential market.
Founded in 1888 as a manufacturer of baking ovens, Middleby Marshall Oven Company was acquired in 1983 by TMC
Industries Ltd., a publicly traded company that changed its name in 1985 to The Middleby Corporation. The company has
established itself as a leading provider of (i) commercial restaurant equipment, (ii) food processing equipment and (iii)
residential kitchen equipment as a result of its acquisition of industry leading brands and through the introduction of innovative
products within each of these segments.
The company's annual reports on Form 10-K, including this Annual Report on Form 10-K, as well as the company's quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to such reports are available, free of charge, on the
company's website, www.middleby.com. These reports are available as soon as reasonably practicable after they are
electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).
Proposed Separation Transaction
On February 25, 2025, the company announced its intent to separate its Food Processing business through a spin-off of the
Food Processing business, under which the stock of Food Processing, as a new independent publicly traded company, will be
distributed to Middleby’s shareholders. As of the date hereof, Middleby is targeting completion of the separation by early 2026,
subject to certain customary conditions, including, among others, final approval by the company’s Board of Directors and the
effectiveness of appropriate filings with the SEC. The spin-off of Food Processing is expected to be tax-free for U.S. federal
income tax purposes. There can be no assurance that any separation transaction will ultimately occur or, if one does occur, of its
terms or timing.
Business Segments and Products
The company conducts its business through three principal business segments: the Commercial Foodservice Equipment Group,
the Food Processing Equipment Group and the Residential Kitchen Equipment Group. See Note 10 to the Consolidated
Financial Statements for further information on the company's business segments.
Commercial Foodservice Equipment Group
The Commercial Foodservice Equipment Group has a broad portfolio of foodservice equipment, which enable it to serve
virtually any cooking, warming, holding, refrigeration, freezing and beverage application within a commercial kitchen or
foodservice operation. This equipment is used across all types of foodservice operations, including quick-service restaurants,
full-service restaurants, ghost kitchens, convenience stores, supermarkets, retail outlets, hotels and other institutions.
This commercial foodservice equipment is marketed under a portfolio of seventy-five brands, including 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, Thor, Toastmaster, TurboChef, U-Line Commercial, Ultrafryer, Varimixer,
Viking Commercial, Wells, Wild Goose Filling and Wunder-Bar.
The products offered by this group include conveyor ovens, combi-ovens, convection ovens, baking ovens, proofing ovens,
deck ovens, high-speed cooking ovens, hydrovection ovens, ranges, fryers, rethermalizers, steam cooking equipment, food
warming equipment, catering equipment, heated cabinets, charbroilers, ventless cooking systems, kitchen ventilation, induction
1
cooking equipment, countertop cooking equipment, toasters, griddles, charcoal grills, professional mixers, stainless steel
fabrication, custom millwork, professional refrigerators, blast chillers, coldrooms, ice machines, freezers, frozen dessert
equipment, soft serve ice cream equipment, coffee and beverage dispensing equipment, home and professional craft brewing
equipment, fry dispensers, bottle filling and canning equipment, IoT solutions and controls development and manufacturing.
Food Processing Equipment Group
The Food Processing Equipment Group offers a broad portfolio of processing solutions for customers producing protein
products, such as bacon, salami, hot dogs, dinner sausages, poultry and lunchmeats and bakery products, such as cakes, muffins,
cookies, crackers, pastries, bread and buns. Through its broad line of products, the company is able to deliver a wide array of
food preparation, thermal processing, slicing/packaging, facility automation and equipment sanitation solutions to service a
variety of food processing requirements demanded by its customers. The company can offer highly integrated full processing
line solutions that provide a food processing operation with a uniquely integrated solution ensuring the highest level of food
quality, product consistency, and reduced operating costs resulting from increased product yields, increased capacity, greater
throughput and reduced labor costs through automation.
This food processing equipment is marketed under a portfolio of thirty-one brands, including Alkar, Armor Inox, Auto-Bake,
Baker Thermal Solutions, Burford, Colussi Ermes, Cozzini, CV-Tek, Danfotech, Drake, Escher, Filtration Automation, GBT
GmbH Bakery, Glimek, Gorreri, Hinds-Bock, Inline Filling Systems, JC Ford, Key-Log, Maurer-Atmos, Maxmac, MP
Equipment, Pacproinc, Proxaut, RapidVisionPak, Scanico, Spooner Vicars, Stewart Systems, Sveba Dahlen, Thurne, and
Vemac.
The products offered by this group include a wide array of cooking and baking solutions, including batch ovens, baking ovens,
proofing ovens, conveyor belt ovens, continuous processing ovens, frying systems and automated thermal processing systems.
The company also provides a comprehensive portfolio of complementary food preparation equipment such as tumblers,
massagers, grinders, slicers, reduction and emulsion systems, mixers, blenders, battering equipment, breading equipment,
seeding equipment, water cutting systems, food presses, food suspension equipment, filling and depositing solutions and
forming equipment, as well as a variety of automated loading and unloading systems, automated washing systems, auto-guided
vehicles, food safety, food handling, freezing, defrosting and packaging equipment. This portfolio of equipment can be
integrated to provide customers a highly efficient and customized solution.
Residential Kitchen Equipment Group
The Residential Kitchen Equipment Group manufactures, sells and distributes premium kitchen equipment for the residential
market. These products are sold and marketed under a portfolio of twenty-four brands, including AGA, AGA Cookshop, Brava,
Char-Griller, EVO, Kamado Joe, La Cornue, Leisure Sinks, Lynx, Marvel, Masterbuilt, Mercury, Novy, Rangemaster,
Rayburn, Sedona, Ss Brewtech, Stanley, Synesso, Trade-Wind, TurboChef, U-Line, Varimixer and Viking. Principal product
lines of this group are ranges, cookers, stoves, cooktops, microwaves, ovens, refrigerators, dishwashers, undercounter
refrigeration, wine cellars, ice machines, beer dispensers, ventilation equipment, mixers, rotisseries and outdoor cooking
equipment.
Acquisition Strategy
The company has pursued a strategy to acquire and assemble a leading portfolio of brands and technologies for each of its three
business segments. Over the past two years, the company has completed eleven acquisitions to add to its portfolio of brands and
technologies of the Commercial Foodservice Equipment Group, Food Processing Equipment Group, and the Residential
Kitchen Equipment Group. These acquisitions have added ten brands to the Middleby portfolio and positioned the company as
a leading provider of equipment in each respective industry. These acquisitions were not individually material and were
acquired for an aggregate purchase price totaling $224.6 million, net of cash acquired.
Commercial Foodservice Equipment Group
•
January 2023: The company completed its acquisition of all of the outstanding equity securities of Flavor Burst
Co., LLP ("Flavor Burst"), an innovative technology used in a variety of flavored beverage and soft serve
products, located in Danville, Indiana.
•
April 2023: The company completed its acquisition of all of the capital stock of Blue Sparq, Inc. ("Blue
Sparq"), a custom hardware and software development company also offering manufacturing services, located
in Cape Coral, Florida.
2
•
July 2023: The company completed its acquisition of all of the capital stock of Systems IV and its subsidiary
Terry, LLC ("Systems IV" or "Terry"), a leader in environmentally friendly solutions to eliminate and prevent
scale build up associated with water usage in commercial foodservice equipment including steam, ice and
beverage products, located in Chandler, Arizona.
•
October 2024: The company completed its acquisition of all of the capital stock of Emery Thompson Machine
& Supply Co. ("Emery Thompson"), a well-known manufacturer of frozen dessert equipment, located in
Brooksville, Florida.
Food Processing Equipment Group
•
June 2023: The company completed its acquisition of all of the capital stock of Filtration Automation, Inc.
("Filtration Automation"), a leading manufacturer of industrial cooking oil filtration machines for the protein,
snack, and fish industries, located in Mansfield, Texas.
•
February 2024: The company completed its acquisition of certain assets of GBT GmbH Bakery Technology
("GBT"), a company experienced in the engineering and manufacturing of high-grade industrial baking and
bread lines, located in Lunen, Germany.
•
April 2024: The company completed its acquisition of all of the capital stock of Maxmac Comercio,
Importacao, Exportacao De Maquinas E Equipmentos LTDA. (“Maxmac”), a manufacturer of food processing
equipment, located in Sao Paulo, Brazil.
•
November 2024: The company completed its acquisition of all of the capital stock of JC Ford, Inc. (“JC Ford”),
a leader in chip and tortilla production systems, located in Columbia, Tennessee.
•
November 2024: The company completed its acquisition of all of the capital stock of Gorreri Food Processing
Technology (“Gorreri”), a leading manufacturer of equipment for the baked goods industry, located near Parma,
Italy.
Residential Kitchen Equipment Group
•
July 2023: The company completed its acquisition of all of the capital stock of Trade-Wind Manufacturing,
LLC ("Trade-Wind"), a premier manufacturer of ventilation innovation for indoor and outdoor residential use,
located in Phoenix, Arizona.
The Customers and Market
Commercial Foodservice Equipment Industry
The company's end-user customers include: (i) fast food, fast casual and quick-service restaurants, including ghost kitchens, (ii)
full-service restaurants, including casual-theme restaurants, (iii) retail outlets, such as convenience stores, supermarkets and
department stores and (iv) public and private institutions, such as hotels, resorts, schools, hospitals, long-term care facilities,
correctional facilities, stadiums, airports, corporate cafeterias, college and universities, military facilities and government
agencies. The company's domestic sales are primarily through independent dealers and distributors and are marketed by the
company's sales personnel and network of independent manufacturers' representatives. Many of the dealers in the U.S. belong
to buying groups that negotiate sales terms with the company. Certain large multi-national restaurant and hotel chain customers
have purchasing organizations that manage product procurement for their systems. Included in these customers are several large
multi-national restaurant chains, which account for a meaningful portion of the company's business, although no single
customer accounts for more than 10% of net sales.
The commercial foodservice equipment industry growth opportunities in the United States are driven by the development of
new quick-service and casual-theme restaurant chain concepts, the expansion of foodservice into nontraditional locations such
as convenience stores and retail outlets, as well as store equipment modernization driven by efforts to improve efficiencies
within foodservice operations. In the international markets, foodservice equipment manufacturers leverage growth opportunities
within emerging international economies and as U.S. chains expand into developing regions.
3
The company believes that the worldwide commercial foodservice equipment market has sales in excess of $35.0 billion. The
company believes that continuing growth in demand for foodservice equipment will result from the development of new
restaurant concepts in the U.S. and the expansion of U.S. and foreign chains into international markets, the replacement and
upgrade of existing equipment and new equipment requirements resulting from menu changes, menu diversity, labor
reallocation and consumer food trends.
The company is developing innovations to solve the challenges within our customers' operations. We believe automated
equipment that addresses labor issues will provide our customers a meaningful return on their investment. Innovative
equipment solutions, including integrated IoT platforms and universal controllers, will allow restaurateurs to scale their
operations quickly and leverage data to make operational decisions.
Food Processing Equipment Industry
The company's customers include a diversified base of leading food processors. Customers include several large international
food processing companies, which account for a significant portion of the revenues of this business segment, although none of
which is greater than 10% of net sales. A large portion of the company's revenues have been generated from producers of
protein products such as bacon, salami, hot dogs, dinner sausages, poultry, lunchmeats, sous vide prepared meals and plant
based/alternative protein and producers of bakery products, such as cakes, muffins, cookies, crackers, pies, bread and buns;
however, the company believes that it can leverage its expertise and product development capabilities in thermal processing to
organically grow into new end markets and offers unique, automated full processing line solutions.
Food processing historically was highly fragmented; however, it has quickly become a highly competitive landscape with the
emergence of large conglomerates that possess a variety of food brands. The consolidation of food processing plants associated
with industry consolidation drives a need for more flexible and efficient equipment that is capable of processing large volumes
of consistent quality products in quicker cycle times. In recent years, food processors have had to conform to the demands of
“big box” retailers and the restaurant industry, including, most importantly, greater product consistency and exact package
weights. Food processors are beginning to realize that their old equipment is no longer capable of efficiently producing
adequate uniformity in the large product volumes required, and they are turning to equipment manufacturers that offer better
process control for proven product consistency, innovative packaging designs and other solutions. To protect their own brands
and reputations, retailers and large restaurant chains are also dictating food safety standards that are often stricter than
government regulations.
A number of factors, including raw material prices, cost of ownership of their equipment, labor and health care costs, are
driving food processors to focus on ways to improve their generally thin profitability margins. In order to increase the
profitability and efficiency in processing plants, food processors pay increasingly more attention to the performance of their
machinery and the flexibility in the functionality of the equipment. Food processors are continuously looking for ways to make
their plants safer and reduce labor-intensive activities. Food processors have begun to recognize the value of new technology as
an important vehicle to drive productivity and profitability in their plants. Due to customer requirements, food processors are
expected to continue to demand new and innovative equipment that addresses food safety, food quality, automation, flexibility
and sustainability.
Improving living standards in developing countries is spurring increased worldwide demand for pre-cooked and convenience
food products. As industrializing countries create more jobs, consumers in these countries will have the means to buy pre-
cooked food products. In industrialized regions, such as Western Europe and the U.S., consumers are demanding more pre-
cooked and convenience food products, such as deli tray variety packs, frozen food products and ready-to-eat varieties of ethnic
foods.
The global food processing equipment industry is large and growing. The company estimates demand for food processing
equipment is in excess of $50.0 billion worldwide.
4
Residential Kitchen Equipment Industry
The company’s end-users include customers with high-end residential kitchens as well as retail dealers of residential cooking
equipment. The market potential for such equipment has continued to broaden due to an increase in interest from the consumer
to have professionally styled appliances with commercial inspired, higher performing features in their home as well as their
outdoor entertaining space. The kitchen, both indoors and out, has been the main area in which consumers have invested the
most money over the past several decades to increase the personal satisfaction and the value of their home. Other important
factors which affect the market size and growth include the level of new home starts, increase in home renovations and general
macro-economic factors. Macro-economic factors such as GDP growth, employment rates, inflation, interest rates and
consumer confidence, which impact the overall economy, impact the residential kitchen equipment industry and cause
variability in the revenues at this segment. The residential kitchen appliance industry is estimated to be in excess of $250.0
billion worldwide.
Backlog
Commercial Foodservice Equipment Group
The backlog of orders for the Commercial Foodservice Equipment Group was $272.2 million at December 28, 2024, most all of
which is expected to be filled during 2025. The Commercial Foodservice Equipment Group's backlog was $395.2 million at
December 30, 2023. The acquired Emery Thompson business accounted for $0.7 million of the backlog. The backlog is not
necessarily indicative of the level of business expected for the year.
Food Processing Equipment Group
The backlog of orders for the Food Processing Equipment Group was $250.7 million at December 28, 2024, which is expected
to be filled by the end of fiscal 2026. The Food Processing Equipment Group's backlog was $250.4 million at December 30,
2023. The acquired GBT, Maxmac, JC Ford, and Gorreri businesses accounted for $58.4 million of the backlog.
Residential Kitchen Equipment Group
The backlog of orders for the Residential Kitchen Equipment Group was $106.7 million at December 28, 2024, all of which is
expected to be filled during 2025. The Residential Kitchen Equipment Group's backlog was $112.1 million at December 30,
2023.
Marketing and Distribution
Commercial Foodservice Equipment Group
Middleby's products and services are marketed in the U.S. and in over 100 countries through a combination of the company's
sales and marketing personnel, together with an extensive network of independent dealers, distributors, consultants, sales
representatives and agents.
In the United States, the company distributes its products to independent end-users primarily through a network of non-
exclusive dealers nationwide, who are supported by manufacturers' marketing representatives. Sales are made direct to certain
large restaurant chains that have established their own procurement and distribution organization for their franchise system. The
company's relationships with major restaurant chains are primarily handled through an integrated effort of top-level executive
and sales management at the corporate and business division levels to best serve each customer's needs. International sales are
primarily made through a network of company owned and local independent distributors and dealers. To supplement the sales
strategy, the company has invested in opening Middleby Innovation Kitchens (the MIK) in Dallas and Spain, which provide
chef-driven demonstration and live cooking on over 150 pieces of live Middleby commercial kitchen innovation.
Food Processing Equipment Group
The company maintains a direct sales force to market the brands and maintain direct relationships with each of its customers. In
North America, the company employs regional sales managers, each with responsibility for a group of customers and a
particular region. This sales force is complimented with involvement of executive management to maintain relationships with
customer executives and facilitate coordination amongst the brands for the key global accounts. Internationally, the company
maintains sales and distribution offices along with global sales managers supported by a network of independent sales
representatives.
5
The company’s sale process is highly consultative due to the highly technical nature of the equipment, especially in the case of
the full processing line solutions. During a typical sales process, salespeople make several visits to the customer’s facility to
conceptually discuss the production requirements, footprint and configuration of the proposed equipment. The company
employs a technically proficient sales force, many of whom have previous technical experience with the company as well as
education backgrounds in food science. The sales strategy of the company is fostered by its own food technologists and with
Protein and Bakery Innovation Centers in Chicago, Dallas and India, which are available for development with technical
performance and product testing for customers.
Residential Kitchen Equipment Group
The company’s products are marketed through a network of distributors, dealers, designers, select online retailers and home
builders to the residential customers. The company markets and sells its products to these channels through a company-
employed sales force. The company’s products are distributed through a combination of an independent network of distributors
and its wholly owned distribution operations. The company's wholly owned distribution operations include two primary
customer support centers and regional logistic warehouse operations, which stock products and service parts for the respective
region. To supplement the sales and distribution network, the company has invested in Middleby branded residential
showrooms in Chicago, Orange County, California and Dallas.
Marketing support is provided to and coordinated with its network of dealers, designers, and home builders' sales partners to
allow for coordinated efforts to market jointly to the end-user customers. The company in certain cases offers incentive based
financial programs to invest in local marketing activities with these sales partners.
Services and Product Warranty
The company is an industry leader in equipment installation programs and after-sales support and service. The company
provides a warranty on its products typically for a one-year period and in certain instances greater periods. The emphasis on
global service increases the likelihood of repeat business and enhances Middleby's image as a partner and provider of quality
products and services.
Commercial Foodservice Equipment Group
The company's domestic service network consists of over 100 authorized service parts distributors and 3,000 independent
certified technicians who have been formally trained and certified by the company through its factory training school and on-
site installation training programs. Technicians work through service parts distributors, which are required to provide around-
the-clock service. The company provides real-time technical support to the technicians in the field through factory-based
technical service engineers. The company maintains sufficient service parts inventory to ensure short lead times for service
calls.
Food Processing Equipment Group
The company maintains a technical service group of employees that oversees and performs installation and startup of equipment
and completes warranty and repair work. This technical service group provides services for customers both domestically and
internationally. Service technicians are trained regularly on new equipment to ensure the customer receives a high level of
customer service. From time to time the company utilizes trained third-party technicians supervised by company employees to
supplement company employees on large projects.
Residential Kitchen Equipment Group
The company maintains a network of independent authorized service agents throughout North America. Authorized service
agents are supported and trained by regional factory-support centers of the company. Trained technical support personnel are
available to support independent service agents with technical information and assist in repair issues. The factory-support
centers also dispatch service technicians to the customer and provide follow-up and monitoring to ensure field issues are
resolved. The company's independent service agents maintain a stock of factory-supplied parts to allow for a high first-call
completion rate for service and warranty repairs. The company maintains a substantial amount of service parts at each of its
manufacturing operations and distribution operations to provide for quick ship of parts to service agents and end-user customers
when necessary.
6
Internationally, the company has a network of company owned and independent distributors that provide sales and technical
service support in their respective markets. These distributors are required to have a team of factory-trained service technicians
and maintain a required stock of service parts to support the equipment in the market. The factory supports the international
distributors with technical trainers which travel to the various markets to provide on-hands training and monitoring of the
distributor service operations.
Competition
The commercial foodservice, food processing and residential kitchen equipment industries are highly competitive and
fragmented. Within a given product line the company may compete with a variety of companies, including companies that
manufacture a broad line of products and those that specialize in a particular product category. Competition is based upon many
factors, including brand recognition, product features, reliability, quality, price, delivery lead times, serviceability and after-sale
service. The company believes that its ability to compete depends on strong brand equity, exceptional product performance,
short lead-times and timely delivery, competitive pricing and superior customer service support. In the international markets,
the company competes with U.S. manufacturers and numerous global and local competitors.
The company believes that it is one of the largest multiple-line manufacturers of commercial kitchen, food processing and
residential kitchen equipment in the U.S. and worldwide although some of its competitors are units of operations that are larger
than the company and possess greater financial and personnel resources. 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, ProMach and Provisur. The residential kitchen appliance sector is highly competitive and includes a number of
large global competitors including, AB Electrolux, GE Appliances, LG Corporation, Panasonic Corporation, Samsung Group,
Weber Inc., and Whirlpool Corporation. However, within the premium segment of this kitchen equipment market, there are
fewer full line competitors and the company’s competition includes Bertazzoni; Bosch, Gaggenau, and Thermador, subsidiaries
of Bosch Siemens; Dacor, subsidiary of Samsung Electronics America; Haier Group; Midea Group; Miele; SMEG S.p.A.; and
Sub-Zero and Wolf, subsidiaries of Sub-Zero Group, Inc.
Manufacturing and Quality Control
The company’s manufacturing operations provide for an expertise in the design and production of specific products for each of
the three business segments. The company has from time to time either consolidated manufacturing facilities producing similar
product or transferred production of certain products to another existing operation with a higher level of expertise or efficiency.
The Commercial Foodservice Equipment Group manufactures its products in twenty-five domestic and nineteen international
production facilities. The Food Processing Equipment Group manufactures its products in thirteen domestic and fourteen
international production facilities. The Residential Kitchen Equipment Group manufactures its products in six domestic and five
international production facilities. See Item 2. Properties for a list of the principal domestic and international manufacturing
facilities by segment.
Metal fabrication, finishing, sub-assembly and assembly operations are typically conducted at each manufacturing facility.
Equipment installed at individual manufacturing facilities includes numerically controlled turret presses and machine centers,
shears, press brakes, welding equipment, polishing equipment, CAD/CAM systems and product testing and quality assurance
measurement devices. The company's CAD/CAM systems enable virtual electronic prototypes to be created, reviewed and
refined before the first physical prototype is built.
Detailed manufacturing drawings are quickly and accurately derived from the model and passed electronically to manufacturing
for programming and optimal parts nesting on various numerically controlled punching cells. The company believes that this
integrated product development and manufacturing process is critical to assuring product performance, customer service and
competitive pricing.
The company has established comprehensive programs to ensure the quality of products, to analyze potential product failures
and to certify vendors for continuous improvement. Products manufactured by the company are tested prior to shipment to
ensure compliance with company standards.
7
Sources of Supply
The company purchases its raw materials and component parts from a number of suppliers. The majority of the company’s
material purchases are standard commodity-type materials, such as stainless steel, electrical components and hardware. These
materials and parts generally are available in adequate quantities from numerous suppliers. Some component parts are obtained
from sole sources of supply. In such instances, management believes it can substitute other suppliers as required. The majority
of fabrication is done internally through the use of automated equipment. Certain equipment and accessories are manufactured
by other suppliers for sale by the company. The company believes it enjoys good relationships with its suppliers.
Research and Development
The company believes its future success will depend in part on its ability to develop new products and to improve existing
products. Much of the company's research and development efforts at the Commercial Foodservice Equipment Group, the Food
Processing Equipment Group and the Residential Kitchen Equipment Group are directed to the development and improvement
of products designed to reduce cooking and processing time, increase capacity or throughput, reduce energy consumption,
minimize labor costs, improve product yield and improve customer, employee and environmental safety, while maintaining
consistency and quality of cooking production and food preparation. The company's efforts have also been focused on IoT
solutions which allow customers to connect, analyze and control equipment, while delivering operational efficiencies. The
company has identified these issues as key concerns for most of its customers. The company often identifies product
improvement opportunities by working closely with customers on specific applications. Most research and development
activities are performed by the company's technical service and engineering staff located at each manufacturing location. On
occasion, the company will contract outside engineering firms to assist with the development of certain technical concepts and
applications. See Note 3(n) to the Consolidated Financial Statements for further information on the company's research and
development activities.
Seasonality
The company’s revenues at the Commercial Foodservice Equipment Group historically have been slightly stronger in the
second and third quarters due to increased purchases from customers involved with the catering business and institutional
customers, particularly schools, during the summer months. Revenues at the Residential Kitchen Equipment Group are
historically stronger in the second and third quarters, due to increased purchases of outdoor cooking equipment and greater new
home construction and remodels during the summer months, and the fourth quarter, due to increased holiday purchases in the
European markets.
Trademarks, Patents and Licenses
The company has developed, acquired and assembled a leading portfolio of trademarks and trade names. The company believes
that these trademarks and trade names help the company compete in the marketplace due to their recognition with customers,
restaurant operators, distribution partners, sales and service agents, and foodservice consultants that specify foodservice
equipment.
The company's leading portfolio of trade names of its Commercial Foodservice Equipment Group include 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, Thor, Toastmaster, TurboChef, U-Line Commercial, Ultrafryer, Varimixer,
Viking Commercial, Wells, Wild Goose Filling and Wunder-Bar.
The company’s leading portfolio of trade names of its Food Processing Equipment Group include Alkar, Armor Inox, Auto-
Bake, Baker Thermal Solutions, Burford, Colussi Ermes, Cozzini, CV-Tek, Danfotech, Drake, Escher, Filtration Automation,
GBT GmbH Bakery, Glimek, Gorreri, Hinds-Bock, Inline Filling Systems, JC Ford, Key-Log, Maurer-Atmos, Maxmac, MP
Equipment, Pacproinc, Proxaut, RapidVisionPak, Scanico, Spooner Vicars, Stewart Systems, Sveba Dahlen, Thurne, and
Vemac.
8
The company’s leading portfolio of trade names of its Residential Kitchen Equipment Group include AGA, AGA Cookshop,
Brava, Char-Griller, EVO, Kamado Joe, La Cornue, Leisure Sinks, Lynx, Marvel, Masterbuilt, Mercury, Novy, Rangemaster,
Rayburn, Sedona, Ss Brewtech, Stanley, Synesso, Trade-Wind, TurboChef, U-Line, Varimixer and Viking.
The company holds a broad portfolio of patents and licenses covering technology and applications related to various products,
equipment and systems. Management believes the expiration of any one of these patents would not have a material adverse
effect on the overall operations or profitability of the company.
Human Capital
As of December 28, 2024, 10,616 persons were employed by the company and its subsidiaries among the various groups as
described below. Of this amount, 5,828 employees were located in the United States and the remaining employees were located
outside of the United States. Unionized employees accounted for approximately 5% of the company’s workforce as of
December 28, 2024. Management believes that the relationships between employees and management are good.
The company believes its success is a direct result of the people employed around the world. The company strives to create a
culture that encourages and celebrates collaboration, creativity and confidence while maintaining an environment based on
ethical values. The goal is to create a workplace that enables employees to develop their individual paths toward their career
goals and encourages a long-term working relationship with the company.
Commercial Foodservice Equipment Group
As of December 28, 2024, 5,904 persons were employed within the Commercial Foodservice Equipment Group. Of
this amount, 2,581 were management, administrative, sales, engineering and supervisory personnel, 2,937 were hourly
production non-union workers and 386 were hourly production union members. Included in these totals were 2,491
individuals employed outside of the United States, of which 1,355 were management, sales, administrative and
engineering personnel, 1,036 were hourly production non-union workers and 100 were hourly production union
workers, who participate in an employee cooperative. At its Windsor, California facility, the company has a union
contract with the Sheet Metal Workers International Association that expires on February 26, 2027. At its Elgin,
Illinois facility, the company has a union contract with the International Brotherhood of Teamsters that expires on July
31, 2025. At its Easton, Pennsylvania facility, the company has a union contract with the United Steel, Paper and
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union that expires on
June 15, 2027. The company also has a union workforce at its manufacturing facility in the Philippines, under a
contract that expires on June 30, 2026. Management believes that the relationships between employees, unions and
management are good.
Food Processing Equipment Group
As of December 28, 2024, 2,508 persons were employed within the Food Processing Equipment Group. Of this
amount, 1,389 were management, administrative, sales, engineering and supervisory personnel, 1,008 were hourly
production non-union workers and 111 were hourly production union members. Included in these totals were 1,298
individuals employed outside of the United States, of which 803 were management, sales, administrative and
engineering personnel and 495 were hourly production non-union workers. At its Lodi, Wisconsin facility, the
company has a contract with the International Association of Bridge, Structural, Ornamental and Reinforcing
Ironworkers that expires on December 31, 2027. At its Algona, Iowa facility, the company has a union contract with
the United Food and Commercial Workers that expires on December 31, 2026. Management believes that the
relationships between employees, unions and management are good.
Residential Kitchen Equipment Group
As of December 28, 2024, 2,116 persons were employed within the Residential Kitchen Equipment Group. Of this
amount, 905 were management, administrative, sales, engineering and supervisory personnel and 1,211 were hourly
production workers. Included in these totals were 999 individuals employed outside of the United States, of which 496
were management, sales, administrative and engineering personnel and 503 were hourly non-union production
workers. Management believes that the relationships between employees and management are good.
Corporate
As of December 28, 2024, 88 persons were employed at the corporate office.
9
Employee Advancement
The company believes offering opportunities for career development within the company is integral to building and retaining an
outstanding workforce. The company is dedicated to the professional development of all employees. Through a commitment to
an engaging culture, the company is able to build a platform that promotes equal opportunities for advancement for everyone.
Employee Safety
The company is dedicated to providing a safe and healthy workplace by operating in accordance with established health and
safety protocols. The company encourages a culture of safety due to the fact it reduces the risk of injury to employees,
decreases expenses, and increases production. Each of our manufacturing locations maintains active safety committees that
frequently review and assess the safety condition of their local work environment. The company invests in safety training,
shares best practices, and reviews claim activity to continually review our progress in minimizing employee injury incidents in
the workplace.
Culture
Fostering a culture that supports employees with a wide range of perspectives and experiences as well as professional growth
and advancement is an integral part of the company’s culture. The company has a commitment to build its workforce from a
broad range of experiences and talents. The company is well-positioned to attract the best talent from a wide range of
communities, which allows better alignment with customers and creative and efficient development of new products for the
marketplace. As a global corporation, the company embraces and celebrates differences among our employees and endeavors to
cultivate an environment where inclusion is a core value of the organization.
A Focus on Ethics
The company is dedicated to promoting integrity, honesty, and professionalism in all of the business activities within the
company. The company strongly believes that business success is a direct correlation of its reputation for fairness and integrity.
Accordingly, it is essential that the company’s board members and employees practice the highest standards of conduct and
professionalism in any interactions with stakeholders including customers, creditors, stockholders, suppliers and other
employees.
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Item 1A. Risk Factors
The company’s business, results of operations, cash flows and financial condition are subject to various risks including, but not
limited to, those set forth below. Any of these risks, as well as risks not currently known to the company or that are currently
deemed to be immaterial, may adversely affect the company’s business, results of operations, cash flows and financial
condition. These risk factors should be carefully considered together with the other information in this Annual Report on Form
10-K, including the risks and uncertainties described under the heading Special Note Regarding Forward-Looking Statements.
Economic Risks
Current and future economic conditions could materially adversely affect the company’s business and financial
performance.
The company’s operating results are impacted by the health of the North American, European, Asian and Latin American
economies. The company’s business and financial performance, including collection of its accounts receivable, may be
materially adversely affected by current and future economic conditions that may cause a decline in business and consumer
spending, a reduction in the availability of credit and decreased growth of its existing customers, resulting in customers electing
to delay the replacement of aging equipment. Higher energy costs, fluctuating interest rates, weakness in the residential
construction, housing and home improvement markets, financial market volatility, inflation, recession, global hostilities and
acts of terrorism, tariffs or changes in tariff policies have and may in the future also adversely affect the company’s business
and financial performance. Additionally, the company may experience difficulties in scaling its operations due to economic
pressures in the U.S. and international markets.
The company is subject to currency fluctuations and other risks from its operations outside the United States.
The company has manufacturing and distribution operations located in Asia, Europe and Latin America. The company’s
operations are subject to the impact of economic downturns, political instability and foreign trade restrictions, which may
adversely affect the company’s business, financial condition and operating results. The company anticipates that international
sales will continue to account for a significant portion of consolidated net sales in the foreseeable future. Some sales and
operating costs of the company’s foreign operations are realized in local currencies, and an increase in the relative value of the
U.S. dollar against such currencies would lead to a reduction in consolidated sales and earnings. Additionally, foreign currency
exposures are not fully hedged, and there can be no assurance that the company’s future results of operations will not be
adversely affected by currency fluctuations. Furthermore, currency fluctuations may affect the prices paid to the company’s
suppliers for materials the company uses in production. As a result, operating margins may also be negatively impacted by
worldwide currency fluctuations that result in higher costs for certain cross-border transactions.
Business and Operational Risks
The company’s level of indebtedness could adversely affect its business, results of operations and growth strategy.
The company now has and may continue to have a significant amount of indebtedness. At December 28, 2024, the company
had $2.4 billion of borrowings and $4.3 million in letters of credit outstanding. In August 2020, the company issued $747.5
million aggregate principal amount of 1.00% Convertible Senior Notes due 2025 (the "Convertible Notes"), which bear interest
semi-annually in arrears and mature on September 1, 2025, unless they are redeemed, repurchased or converted prior to such
date in accordance with their terms. Upon conversion, the company can elect to pay or deliver cash, shares of common stock or
a combination of cash and shares of common stock, in respect of the remainder, if any, of the company's conversion obligation
in excess of the aggregate principal amount of the Convertible Notes being converted. Under certain circumstances, the holders
of the Convertible Notes may require the company to repay all or a portion of the principal and interest outstanding under the
Convertible Notes in cash prior to the maturity date, which could have an adverse effect on the company's financial results.
To the extent the company requires additional capital resources, there can be no assurance that such funds will be available on
favorable terms, or at all. The unavailability of funds could have a material adverse effect on the company’s financial condition,
results of operations and ability to expand the company’s operations.
The company’s level of indebtedness could have adverse consequences to its business and operations, including the following:
•
the company may be unable to obtain additional financing for working capital, capital expenditures, product
development, acquisitions and other general corporate purposes;
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•
a significant portion of the company’s cash flow from operations must be dedicated to debt service, which reduces
the amount of cash the company has available for other purposes;
•
the company may be more vulnerable in the event of a downturn in the company’s business or general economic
and industry conditions and have limited flexibility in planning for, or reacting to, changes in its business and/or
industry;
•
the company may be disadvantaged compared to its competitors that are less leveraged and thereby have greater
financial flexibility; and
•
the company may be restricted in its ability to make strategic acquisitions and to pursue new business
opportunities.
The company’s current credit agreement limits its ability to conduct business, which could negatively affect the
company’s ability to finance future capital needs and engage in other business activities.
The covenants in the company’s existing credit agreement contain a number of significant limitations on its ability to, among
other things:
•
pay dividends;
•
incur additional indebtedness;
•
create liens on the company’s assets;
•
engage in new lines of business;
•
make investments;
•
merge or consolidate; and
•
acquire, dispose of, or lease assets.
These restrictive covenants, among others, could negatively affect the company’s ability to finance its future capital needs,
engage in other business activities or withstand a future downturn in the company’s business or the economy.
Under the company’s current credit agreement, the company is required to maintain certain specified financial ratios and meet
financial tests, including certain ratios of secured leverage and interest coverage. The company’s ability to comply with these
requirements may be affected by matters beyond its control, and, as a result, there can be no assurance that the company will be
able to meet these ratios and tests. A breach of any of these covenants would prevent the company from being able to draw
under the company's revolver and would result in a default under the company’s current credit agreement. In the event of a
default under the company’s current credit agreement, the lenders could terminate their commitments and declare all amounts
borrowed, together with accrued interest and other fees, to be immediately due and payable. Borrowings under other debt
instruments that contain cross-acceleration or cross-default provisions may also be accelerated and become due and payable at
such time. The company may be unable to pay these debts in these circumstances.
The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect the company's financial
condition and operating results.
In the event the conditional conversion feature of the Convertible Notes is triggered, holders of the Convertible Notes will be
entitled to convert their Convertible Notes at any time during specified periods at their option. If one or more holders elect to
convert their Convertible Notes, unless the company elects to satisfy the conversion obligation by delivering solely shares of its
common stock (other than paying cash in lieu of delivering any fractional share), the company would be required to settle any
converted principal through the payment of cash, which could adversely affect the company's liquidity. To the extent the
company satisfies the conversion obligation by delivering shares of common stock, the company would be required to deliver a
significant number of shares, which would cause dilution to its existing stockholders. In addition, even if holders do not elect to
convert their Convertible Notes in such circumstances, the company could be required under applicable accounting rules to
reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which
would result in a material reduction in net working capital.
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The capped call transactions expose the company to counterparty risk and may affect the value of the company's
common stock.
In connection with the Convertible Notes, the company has entered into and may in the future enter into, capped call
transactions with certain financial institutions, referred to as the capped call counterparties. The capped call transactions are
expected generally to reduce or offset the potential dilution upon conversion of the Convertible Notes and/or offset any cash
payments the company is required to make in excess of the principal amount of the Convertible Notes, as the case may be, with
such reduction and/or offset subject to a cap. From time to time, the capped call counterparties or their respective affiliates may
modify their hedge positions by entering into or unwinding various derivative transactions with respect to the company's
common stock and/or purchasing or selling the company's common stock in secondary market transactions prior to the maturity
of the Convertible Notes. Any such activity could cause a decrease in the market price of the company's common stock.
In addition, the capped call counterparties are financial institutions, and the company is subject to the risk that one or more of
the capped call counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their
obligations under the capped call transactions. The company's exposure to the credit risk of the capped call counterparties is not
secured by any collateral. If a capped call counterparty becomes subject to insolvency proceedings, the company will become
an unsecured creditor in those proceedings with a claim equal to the exposure at the time under such transaction. The company's
exposure will depend on many factors but, generally, the exposure will increase if the market price or the volatility of the
company's common stock increases. In addition, upon a default or other failure to perform, or a termination of obligations, by a
capped call counterparty, the company may suffer more dilution than currently anticipated with respect to the company's
common stock. The company can provide no assurances as to the financial stability or viability of the capped call
counterparties.
Fluctuations in interest rates could adversely affect the company's results of operations and financial position.
The company's profitability has been and may in the future be adversely affected during any periods of unexpected or rapid
increases in interest rates. The company maintains a revolving credit facility, which, at December 28, 2024, bore interest at
1.375% above Secured Overnight Financing Rate ("SOFR") plus a spread adjustment of 0.10% per annum. A significant
increase in any of the forgoing rates would significantly increase the company's cost of borrowings, reduce the availability and
increase the cost of obtaining new debt and refinancing existing indebtedness and/or negatively impact the market price of the
company's common stock. For additional detail related to this risk, see Part II, Item 7A, "Quantitative and Qualitative
Disclosure About Market Risk."
The company has a significant amount of goodwill and indefinite life intangibles could suffer losses due to asset
impairment charges.
The company’s balance sheet includes a significant amount of goodwill and indefinite life intangible assets, which represent
approximately 35% and 18%, respectively, of its total assets as of December 28, 2024. The excess of the purchase price over
the fair value of assets acquired, including identifiable intangible assets, and liabilities assumed in conjunction with acquisitions
is recorded as goodwill. In accordance with Accounting Standards Codification (“ASC”) 350 Intangibles-Goodwill and Other,
the company’s long-lived assets (including goodwill and other intangibles) are reviewed for impairment annually and whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the
recoverability of long-lived assets, the company considers changes in economic conditions and makes assumptions regarding
estimated future cash flows and other factors. Various uncertainties, including continued adverse conditions in the capital
markets or changes in general economic conditions, could impact the future operating performance at one or more of the
company’s businesses, which could significantly affect the company’s valuations and could result in additional future
impairments. Also, estimates of future cash flows are judgments based on the company’s experience and knowledge of
operations. These estimates could be significantly impacted by many factors, including changes in global and local business and
economic conditions, operating costs, inflation, competition, and consumer and demographic trends. If the company’s estimates
or the underlying assumptions change in the future, the company may be required to record impairment charges that, if
incurred, could have a material adverse effect on the company’s reported net earnings.
13
The company's defined benefit pension plans are subject to financial market risks that could adversely affect the
company's results of operations and cash flows.
The performance of the financial markets and interest rates impact our defined benefit pension plan expenses and funding
obligations. Significant changes in market interest rates, decreases in fair value of plan assets, investment losses on plan assets,
relevant legislative and regulatory changes relating to defined benefit plan funding and changes in interest rates may increase
the company's funding obligations and adversely impact its results of operations and cash flows. In addition, upward pressure
on the cost of providing healthcare coverage to current employees and retirees may increase the company's future funding
obligations and adversely affect its results of operations and cash flows.
The company faces intense competition in the commercial foodservice, food processing, and residential kitchen
equipment industries and failure to successfully compete could impact the company’s results of operations and cash
flows.
The company operates in highly competitive industries. In each of the company’s three business segments, competition is based
on a variety of factors including product features and design, brand recognition, reliability, durability, technology, energy
efficiency, breadth of product offerings, price, customer relationships, delivery lead-times, serviceability and after-sale service.
The company has numerous competitors in each business segment. Many of the company’s competitors are substantially larger
and enjoy substantially greater financial, marketing, technological and personnel resources. These factors may enable them to
develop similar or superior products, to provide lower cost products and to carry out their business strategies more quickly and
efficiently than the company can. In addition, some competitors focus on particular product lines or geographic regions or
emphasize their local manufacturing presence or local market knowledge. Some competitors have different pricing structures
and may be able to deliver their products at lower prices. Although the company believes that the performance and price
characteristics of its products will provide competitive solutions for its customers’ needs, there can be no assurance that the
company’s customers will continue to choose the company’s products over products offered by its competitors.
Further, the markets for the company’s products are characterized by changing technology and evolving industry standards,
including a focus on developing and manufacturing energy efficient products in a sustainable way. The company’s ability to
compete successfully will depend, in large part, on its ability to enhance and improve its existing products, including its energy
efficient products and products manufactured through a process designed to reduce emissions, to continue to bring innovative
products to market in a timely fashion, to adapt the company’s products to the needs and standards of its current and potential
customers and to continue to improve operating efficiencies and lower manufacturing costs. Moreover, competitors may
develop technologies or products that render the company’s products obsolete or less marketable. If the company is unable to
successfully compete in this highly competitive environment, the company’s business, financial condition and operating results
will be materially harmed.
The company is subject to risks associated with developing products and technologies, which could delay product
introductions and result in significant expenditures.
The product, program and service needs of the company’s customers change and evolve regularly, and the company invests
substantial amounts in research and development efforts to pursue advancements in a wide range of technologies, products and
services. Also, the company continually seeks to refine and improve upon the performance, utility and physical attributes of its
existing products and to develop new products. As a result, the company’s business is subject to risks associated with new
product and technological development, including unanticipated technical or other problems, meeting development, production,
certification and regulatory approval schedules, execution of internal and external performance plans, availability of supplier-
and internally-produced parts and materials, performance of suppliers and subcontractors, hiring and training of qualified
personnel, achieving cost and production efficiencies, identification of emerging technological trends in the company’s target
end-markets, validation of innovative technologies, the level of customer interest in new technologies and products, and
customer acceptance of the company’s products and products that incorporate technologies that the company develops. These
factors involve significant risks and uncertainties. Also, any development efforts divert resources from other potential
investments in the company’s businesses, and these efforts may not lead to the development of new technologies or products on
a timely basis or meet the needs of the company’s customers as fully as competitive offerings. In addition, the markets for the
company’s products or products that incorporate the company’s technologies may not develop or grow as the company
anticipates. The company or its suppliers and subcontractors may encounter difficulties in developing and producing these new
products and services, and may not realize the degree or timing of benefits initially anticipated. Due to the design complexity of
the company's products, the company may in the future experience delays in completing the development and introduction of
new products. Any delays could result in increased development costs or deflect resources from other projects. The occurrence
of any of these risks could cause a substantial change in the design, delay in the development, or abandonment of new
14
technologies and products. Consequently, there can be no assurance that the company will develop new technologies superior to
the company’s current technologies or successfully bring new products to market.
Additionally, there can be no assurance that new technologies or products, if developed, will meet the company’s current price
or performance objectives, be developed on a timely basis, or prove to be as effective as products based on other technologies.
The inability to successfully complete the development of a product, or a determination by the company, for financial, technical
or other reasons, not to complete development of a product, particularly in instances in which the company has made significant
expenditures, could have a material adverse effect on the company’s financial condition and operating results.
The company depends on key customers for a material portion of its revenues. As a result, changes in the purchasing
patterns or loss of one or more key customers could adversely impact the company’s operating results.
Many of the company’s key customers are large restaurant chains and major food processing companies. The demand for the
company’s equipment can vary from period to period depending on the company’s customers’ internal growth plans,
construction, seasonality and other factors. In addition, an adverse change to the financial condition of key customers could
cause such key customers to open fewer facilities and defer purchases of new equipment for existing operations or otherwise
change the purchasing patterns of such key customers. Any of these conditions or the loss of key customers could have a
material adverse effect on the company’s financial condition and results of operations.
Price increases in some materials and disruptions in supply could affect the company’s profitability.
The company uses large amounts of stainless steel, aluminized steel and other commodities in the manufacture of its products.
A significant increase in the prices of steel or any other commodity, changes in trade policies, including the imposition of tariffs
or other trade restrictions, have in the past and have the potential to in the future to create upward pressure on commodity prices
leading to a potentially unfavorable impact on operating results. Unanticipated delays in delivery of raw materials and
component inventories by suppliers—including delays due to capacity constraints, labor disputes, attacks on maritime ocean
shipments, impaired financial condition of suppliers, natural disasters, extreme weather patterns and climate change, pandemics
or other events outside of our control— have and may increase the company's production costs, cause delays in the shipment of
products or impair the ability of the company to satisfy customer demand. An interruption in or the cessation of an important
supply by any third party and the company’s inability to make alternative arrangements in a timely manner, or at all, could have
a material adverse effect on the company’s business, financial condition and operating results.
The company faces risks related to health epidemics and other widespread outbreaks of contagious disease, which
could significantly disrupt its operations and impact its operating results.
The spread of contagious diseases or other adverse public health developments, has had a material and adverse effect on our
business operations. These effects have included and may in the future include disruptions or restrictions on our ability to
travel, temporary closures of our or our customers' facilities and disruptions to our supply chain. Any disruption of our, our
suppliers' or our customers' businesses due to adverse public health developments could have a material impact on our sales and
operating results.
The company may be the subject of product liability claims or product recalls, and it may be unable to obtain or
maintain insurance adequate to cover potential liabilities.
Product liability is a significant commercial risk to the company. The company’s business exposes it to potential liability risks
that arise from the manufacturing, marketing and selling of the company’s products. In addition to direct expenditures for
damages, settlement and defense costs, there is a possibility of adverse publicity as a result of product liability claims. Plaintiffs
in some jurisdictions have received substantial damage awards against companies based upon claims for injuries allegedly
caused by the use of their products. In addition, it may be necessary for the company to recall products that do not meet
approved specifications, which could result in adverse publicity as well as costs connected to the recall and loss of revenue.
The company cannot be certain that a product liability claim or series of claims brought against it would not have an adverse
effect on the company’s business, financial condition or results of operations. If any claim is brought against the company,
regardless of the success or failure of the claim, there can be no assurance that the company will be able to obtain or maintain
product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities or the cost of
a recall. The company currently maintains insurance programs consisting of self-insurance up to certain limits and excess
insurance coverage for claims over established limits. There can be no assurance that the company's insurance programs will
provide adequate protection against actual losses. In addition, the company is subject to the risk that one or more of its insurers
may become insolvent or become unable to pay claims that may be made in the future.
15
An increase in warranty expenses could adversely affect the company’s financial performance.
The company offers purchasers of its products warranties covering workmanship and materials typically for one year and, in
certain circumstances, for periods of up to ten years, during which periods the company or an authorized service representative
will make repairs and replace parts that have become defective in the course of normal use. The company estimates and records
its future warranty costs based upon past experience. These warranty expenses may increase in the future and may exceed the
company’s warranty reserves, which, in turn, could adversely affect the company’s financial performance.
The company’s financial performance is subject to significant fluctuations.
The company’s financial performance is subject to quarterly and annual fluctuations due to a number of factors, including:
• general economic conditions;
•
the lengthy, unpredictable sales cycle for the commercial foodservice equipment, food processing equipment and
residential kitchen equipment groups;
• the gain or loss of significant customers;
• unexpected delays in new product introductions;
•
the level of market acceptance of new or enhanced versions of the company’s products;
• unexpected changes in the levels of the company’s operating expenses; and
• competitive product offerings and pricing actions.
Each of these factors could result in a material and adverse change in the company’s business, financial condition and results of
operations.
The company may be unable to manage its growth.
The company has and may in the future experience rapid growth in its business, which could place a strain on the company’s
management, operations and financial resources. There also will be additional demands on the company’s sales, marketing and
information systems and on the company’s administrative infrastructure as it develops and offers additional products and enters
new markets. The company cannot be certain that the company’s operating and financial control systems, administrative
infrastructure, outsourced and internal production capacity, facilities and personnel will be adequate to support the company’s
future operations or to effectively adapt to future growth. If the company cannot manage the company’s growth effectively, the
company’s business may be harmed.
16
Strategic and Organizational Risks
The company’s acquisition, investment and alliance strategy involves risks. If the company is unable to effectively
manage these risks, its business will be materially harmed.
To achieve the company’s strategic objectives, the company has pursued and may continue to pursue strategic acquisitions of
and investments in other companies, businesses or technologies. Acquisitions and investments entail numerous risks, including,
among others:
• difficulties in the assimilation of acquired businesses or technologies and the inability to fully realize some of the
expected synergies or otherwise achieve anticipated revenues and profits;
•
inability to operate acquired businesses or utilize acquired technologies profitably;
•
the significant amount of management time and attention needed to identify, execute and integrate any acquired
businesses;
•
potential assumption of unknown material liabilities;
•
failure to achieve financial or operating objectives;
• unanticipated costs relating to acquisitions or to the integration of acquired businesses;
•
loss of customers, suppliers, or key employees; and
•
the impact on the company's internal controls and compliance with the regulatory requirements under the
Sarbanes-Oxley Act of 2002.
The company may not be able to successfully integrate any operations, personnel, services or products that it has acquired or
may acquire in the future.
The company may seek to expand or enhance some of its operations by forming joint ventures or alliances with various
strategic partners throughout the world. Entering into joint ventures and alliances also entails risks, including difficulties in
developing and expanding the businesses of newly formed joint ventures, exercising influence over the activities of joint
ventures in which the company does not have a controlling interest and potential conflicts with the company’s joint venture or
alliance partners. The company cannot assure that any joint venture or alliance entered into or that may be entered into in the
future will be successful.
An inability to identify or complete future acquisitions could adversely affect future growth.
The company intends to continue its growth strategy of identifying and acquiring businesses with complementary products and
services by pursuing acquisitions that provide opportunities for profitable growth. While the company continues to evaluate
potential acquisitions, it may not be able to identify and successfully negotiate suitable acquisitions, obtain financing for future
acquisitions on satisfactory terms, obtain regulatory approval for certain acquisitions, or otherwise complete acquisitions in the
future. An inability to identify or complete future acquisitions could limit the company’s growth.
17
Expansion of the company’s international operations involves special challenges that it may not be able to meet. The
company’s failure to meet these challenges could adversely affect its business, financial condition and operating results.
The company plans to continue to expand its international operations. The company faces certain risks inherent in doing
business in international markets. These risks include:
•
extensive regulations and oversight, tariffs, including with respect to certain products imported from China or
exported to China, retaliatory tariffs by China and certain other countries in response to tariffs implemented by the
United States, and other trade barriers;
•
withdrawal from or renegotiation of international trade agreements and other restrictions on trade between the
United States and China, the European Union, Canada, Mexico and other countries;
•
uncertain impact on operations, suppliers and customers related to business disruptions in international
jurisdictions;
•
reduced protection for intellectual property rights;
•
difficulties in staffing and managing foreign operations;
•
potentially adverse tax consequences;
•
limitations on ownership and on repatriation of earnings;
•
transportation delays and interruptions;
•
political, social, and economic instability and disruptions;
•
labor unrests or shortages;
•
potential for nationalization of enterprises; and
•
limitations on the company’s ability to enforce legal rights and remedies.
In addition, the company is and will be required to comply with the laws and regulations of foreign governmental and
regulatory authorities of each country in which the company conducts business.
There can be no assurance that the company will be able to succeed in marketing its products and services in international
markets. The company may also experience difficulty in managing its international operations because of, among other things,
competitive conditions overseas, geopolitical threats or hostilities, management of foreign exchange risk, established domestic
markets, and language and cultural differences. Any of these factors could have a material adverse effect on the success of the
company’s international operations and, consequently, on the company’s business, financial condition and operating results.
The impact of future transactions on the company’s common stock is uncertain.
The company periodically reviews potential transactions related to products or product rights and businesses complementary to
the company’s business. Such transactions could include mergers, acquisitions, joint ventures, alliances or licensing
agreements. In the future, the company may choose to enter into such transactions at any time. The impact of transactions on
the market price of a company’s stock is often uncertain and may include substantial fluctuations. Consequently, any
announcement of any such transaction could have a material adverse effect upon the market price of the company’s common
stock. Moreover, depending upon the nature of any transaction, the company may experience a charge to earnings, which could
be material and have an adverse impact upon the market price of the company’s common stock.
18
We are pursuing a plan separate our Food Processing business through a spin-off into an independent publicly traded
company. The proposed spin-off may not be completed on the timeline currently contemplated or at all and may not
achieve the intended benefits.
As part of our previously-announced strategic review of our business portfolio as part of the Board’s efforts to maximize
shareholder value, we have announced a plan to separate our Food Processing business through a spin-off into an independent
publicly traded company, which is currently expected to be completed by early 2026. Unanticipated developments could delay
or prevent the proposed spin-off or cause the proposed spin-off to occur on terms or conditions that are less favorable and/or
different than expected. Even if the transaction is completed, we may not realize all or any of the anticipated benefits from the
spin-off. Expenses incurred to accomplish the proposed spin-off may be significantly higher than what we currently anticipate.
Executing the proposed spin-off also requires significant time and attention from management, which could distract them from
other tasks in operating our business. Following the proposed spin-off, the combined value of the common stock of the two
publicly traded companies may not be equal to or greater than what the value of our common stock would have been had the
proposed spin-off not occurred.
The company’s business could suffer in the event of a work stoppage by its unionized labor force.
Because the company has a significant number of workers whose employment is subject to collective bargaining agreements
and labor union representation, the company is vulnerable to possible organized work stoppages and similar actions. Unionized
employees accounted for approximately 5% of the company’s workforce as of December 28, 2024. The company has union
contracts with employees at its facilities in Windsor, California; Algona, Iowa; Elgin, Illinois; Easton, Pennsylvania and Lodi,
Wisconsin that extend or extended through February 2027, December 2026, July 2025, June 2027 and December 2027,
respectively. The company also has a union workforce at its manufacturing facility in the Philippines under a contract that
extends through June 2026. Less than 1% of the company's workforce is covered by collective bargaining agreements that
expire within one year. Any future strikes, employee slowdowns or similar actions by one or more unions, in connection with
labor contract negotiations or otherwise, could have a material adverse effect on the company’s ability to operate the company’s
business.
The company depends significantly on its key personnel.
The company depends significantly on the company’s executive officers and certain other key personnel, who could be difficult
to replace. While the company has an employment agreement with a key executive, the company cannot be certain that it will
succeed in retaining key personnel or their services under existing agreements. The incapacity, inability or unwillingness of
certain personnel to perform their services may have a material adverse effect on the company. There is intense competition for
qualified personnel within the company’s industry, and there can be no assurance that the company will be able to continue to
attract, motivate and retain personnel with the skills and experience needed to successfully manage the company's business and
operations.
Technology and Cybersecurity Risks
The company may not be able to adequately protect its intellectual property rights, which may materially harm its
business.
The company relies primarily on trade secret, copyright, service mark, trademark and patent law and contractual protections to
protect the company’s proprietary technology and other proprietary rights. The company has filed numerous patent applications
covering the company’s proprietary technology. It is possible that third parties may copy or otherwise obtain and use the
company’s proprietary technology without authorization or may otherwise infringe on the company’s rights. In some cases,
including with respect to a number of the company’s most important products, there may be no effective legal recourse against
duplication by competitors as the legal systems of certain countries, particularly certain developing countries, do not favor the
enforcement of patents and other intellectual property protection. This could make it difficult for us to stop the infringement of
our patents and future patents we may own, or, generally, prevent the marketing of competing products in violation of our
proprietary rights. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same
manner as the laws of the United States. In the future, the company may have to rely on litigation to enforce its intellectual
property rights, protect its trade secrets, determine the validity and scope of the proprietary rights of others or defend against
claims of infringement or invalidity. Any such litigation, whether successful or unsuccessful, could result in substantial costs to
the company and diversions of the company’s resources, either of which could adversely affect the company’s business.
19
Any infringement by the company of a third party's patent rights could result in litigation and adversely affect its ability
to provide, or could increase the cost of providing, the company’s products and services.
Patents of third parties may have an important bearing on the company’s ability to offer some of its products and services. The
company’s competitors, as well as other companies and individuals, may obtain patents related to the types of products and
services the company offers or plans to offer. There can be no assurance that the company is or will be aware of all patents
containing claims that may pose a risk of infringement by its products and services. In addition, some patent applications in the
United States are confidential until a patent is issued and, therefore, the company cannot evaluate the extent to which its
products and services may be covered or asserted to be covered by claims contained in pending patent applications. In general,
if one or more of the company’s products or services were to infringe patents held by others, the company may be required to
stop developing or marketing the products or services, to obtain licenses from the holders of the patents to develop and market
the services, or to redesign the products or services in such a way as to avoid infringing on the patent claims. The company
cannot assess the extent to which it may be required in the future to obtain licenses with respect to patents held by others,
whether such licenses would be available or, if available, whether it would be able to obtain such licenses on commercially
reasonable terms. If the company is unable to obtain such licenses, it also may not be able to redesign the company’s products
or services to avoid infringement, which could materially adversely affect the company’s business, financial condition and
operating results.
The company is subject to information technology system failures, network disruptions, cybersecurity attacks and
breaches in data security, which may materially adversely affect the company’s operations, financial condition and
operating results.
The company depends on information technology as an enabler to improve the effectiveness of its operations and to interface
with its customers, as well as to maintain financial accuracy and efficiency. Information technology system failures,
including suppliers’ or vendors’ system failures, have and could in the future disrupt the company’s operations by causing
transaction errors, processing inefficiencies, delays or cancellation of customer orders, the loss of customers, impediments to
the manufacture or shipment of products, other business disruptions, or the loss of or damage to intellectual property through
a security breach.
The company’s information systems, or those of its third-party service providers, have and may in the future be intent on
extracting information, corrupting information or disrupting business processes. Such unauthorized access could materially
disrupt the company’s business, increase costs and/or result in the loss of assets. Cybersecurity attacks are becoming more
sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other
electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or
otherwise protected information, corruption or destruction of data and other manipulation or improper use of systems or
networks. These events could negatively impact the company’s customers and/or reputation and lead to financial losses from
remediation actions, loss of business, production downtimes, operational delays or potential liability, penalties, fines or other
increases in expense, all of which may have a material adverse effect on the company’s business. In addition, as security
threats and cybersecurity and data privacy and protection laws and regulations, including those related to the collection,
storage, handling, use, disclosure, transfer, and security of personally identifiable information, continue to evolve and become
more sophisticated, we may invest additional resources in the security of our systems. Any such increased investment could
materially increase our costs and adversely affect our financial condition or results of operations. Further, as governmental
authorities around the world continue to consider legislative and regulatory proposals concerning data protection in addition
to those already in place, we are and may continue to be subject to substantial penalties if we fail to comply with data
protection laws and regulations.
Tax, Legal and Regulatory Risks
The company may be subject to litigation, tax, and other legal compliance risks.
In addition to product liability claims, the company is subject to a variety of litigation, tax, and other legal compliance risks.
These risks include, among other things, possible liability relating to personal injuries, intellectual property rights, contract-
related claims, taxes and compliance with U.S. and foreign export laws, competition laws, and laws governing improper
business practices. The company or one of its business units could be charged with wrongdoing as a result of such matters. If
convicted or found liable, the company could be subject to significant fines, penalties, repayments or other damages.
20
The company’s reputation, ability to do business, and results of operations may be impaired by the improper conduct of
any of its employees, agents, or business partners.
While the company strives to maintain high standards, the company cannot provide assurance that its internal controls and
compliance systems will always protect the company from acts committed by its employees, agents, or business partners that
violate U.S. and/or foreign laws or fail to protect the company’s confidential information, including the laws governing
payments to government officials, bribery, fraud, anti-kickback and false claims rules, competition, export and import
compliance, money laundering, and data privacy laws, as well as the improper use of proprietary information or social media.
Any such violations of law or improper actions could subject the company to civil or criminal investigations in the United
States and in other jurisdictions, lead to substantial civil or criminal, monetary and non-monetary penalties, and related
shareholder lawsuits, lead to increased costs of compliance and damage the company’s reputation.
The company is subject to potential liability under environmental laws.
The company’s operations are regulated by a number of federal, state and local environmental laws and regulations that govern,
among other things, the discharge of hazardous materials into the air and water as well as the handling, storage and disposal of
these materials. Compliance with these environmental laws and regulations is a significant consideration for the company
because it uses hazardous materials in its manufacturing processes. In addition, because the company is a generator of
hazardous wastes, even if it fully complies with applicable environmental laws, it may be subject to financial exposure for costs
associated with an investigation and remediation of sites at which it has arranged for the disposal of hazardous wastes if these
sites become contaminated. In the event of a violation of environmental laws, the company could be held liable for damages
and for the costs of remedial actions. Environmental laws could also become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with any violation, which could negatively affect the company’s
operating results. There can be no assurance that identification of presently unidentified environmental conditions, more
vigorous enforcement by regulatory authorities or other unanticipated events will not arise in the future resulting in additional
environmental liabilities, compliance costs and penalties that could be material. Environmental laws and regulations are
constantly evolving, and it is impossible to accurately predict the effect they may have upon the financial condition, results of
operations, or cash flows of the company.
We are subject to risks associated with climate change legislation, regulation and international accords. In addition,
failure to achieve or demonstrate progress towards our climate goals may expose us to liability and reputational harm.
Government mandates, standards or regulations intended to reduce greenhouse gas emissions or projected climate change
impacts have resulted in, and are likely to continue resulting in, increased energy, manufacturing, transportation and raw
material costs. Governmental requirements directed at regulating greenhouse gas emissions could cause us to incur expenses
that we cannot recover or that will require us to increase the price of products we sell, which could impact the demand for those
products.
Additionally, as discussed further in our 2023 Sustainability Report, accessible at www.middleby.com/sustainability, we have
made commitments to reduce the environmental impact of our operations and provide sustainable solutions to our customers,
including setting targets for reducing our Greenhouse Gas (“GHG”) emission and consumption of non-renewable resources.
There can be no assurance that we will achieve our climate-related goals on the timeline anticipated or at all. Further, future
events or circumstances could lead us to prioritize other business interests over progressing toward our current climate goals
due to factors such as business strategy, economic conditions, regulatory changes or pressure from stakeholders. If we fail or
are perceived to fail to progress toward achieving our climate-related goals and commitments or if our investors, customers or
other stakeholders become dissatisfied with the level of GHG emissions produced by our production process or our products,
we could face adverse publicity, which could have a material adverse impact on our business, financial condition and results of
operations
Unfavorable tax law changes and tax authority rulings may adversely affect financial results.
The company is subject to income taxes in the United States and in various foreign jurisdictions. Domestic and international tax
liabilities are based on the income and expenses in various tax jurisdictions. The amount of the company’s income and other tax
liability is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. authorities. If these audits
result in assessments different from amounts recorded, future financial results may include unfavorable tax adjustments.
In December 2021, The Organisation for Economic Co-operation and Development ("OECD") issued Pillar II model rules
which would establish a global per-country minimum tax of 15%. The directive requires the rules to initially become effective
for fiscal years starting on or after December 31, 2023. While it is uncertain whether the United States will enact legislation to
adopt Pillar II, numerous countries have enacted legislation, or have indicated their intent to adopt legislation, to implement
21
certain aspects of Pillar II effective January 1, 2024, and the remaining global minimum tax rules by January 1, 2025. The
OECD and implementing countries are expected to continue to make further revisions to their legislation and release additional
guidance.
The trading price of the company's common stock has been volatile, and investors in the company's common stock may
experience substantial losses.
The trading price of the company's common stock has been volatile and may become volatile again in the future. The trading
price of the company's common stock could decline or fluctuate in response to a variety of factors, including:
•
the company's failure to meet the performance estimates of securities analysts;
•
changes in buy/sell recommendations by securities analysts;
•
fluctuations in the company's operating results;
•
substantial sales of the company's common stock;
•
general stock market conditions; or
•
other economic or external factors.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Risk Management and Strategy
The company maintains a cybersecurity risk management program as part of its overall risk management framework and
regularly assesses risks from cybersecurity threats, monitors its information systems for potential vulnerabilities and tests those
systems pursuant to the company’s cybersecurity standards, processes, and practices. To protect the company’s information
systems from cybersecurity threats, the company uses various security tools that help the company identify, escalate,
investigate, resolve, and recover from security incidents in a timely manner. These efforts include but are not limited to, internal
reporting, engaging third-party service providers to actively monitor information systems, performing vulnerability testing
using external third-party tools and techniques to test security controls, conducting employee training, monitoring emerging
trends and regulations related to information security, and implementing appropriate changes, as needed, to our cybersecurity
risk management program.
The company partners with third parties to assess the effectiveness of our cybersecurity prevention and response systems and
processes. These assessments include penetration testing, vulnerability assessments, tabletop exercises, and reviews of incident
response protocols that are designed to ensure robust protections against evolving threats.
The company has processes that aim to validate security controls and engages third parties to design or assess security
architecture, and certifications. This includes assessing the potential fourth-party risks related to employee, business, and
customer data. During the third-party procurement and contracting process, the company incorporates contract provisions that
are designed to align with applicable regulations and industry benchmarks.
To date, the Company is not aware of cybersecurity threats, including as a result of any previous cybersecurity incidents, that
have materially affected or are reasonably likely to affect the Company, including its business strategy, results of operations or
financial condition. Refer to the risk factor captioned “The Company may be subject to information technology system failures,
network disruptions, cybersecurity attacks and breaches in data security, which may materially adversely affect the Company’s
operations, financial condition and operating results” in Part I, Item 1A. “Risk Factors” for additional description of
cybersecurity risks and potential related impacts on the Company.
22
Governance
The company takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its
operations that are designed to address cybersecurity threats and incidents. In particular, the company dedicates significant
resources in an effort to secure its confidential information as well as the data and any personal information the Company
receives and stores about its customers and employees. The company has systems in place designed to securely receive and
store that information and to detect, contain, and respond to data security incidents.
The company has a robust information security training and compliance program for all new and existing employees. Training
is provided at least annually, with a formal communication cadence of additional components of training being provided
throughout the year. Employee cybersecurity proficiency is assessed quarterly, with supplementary training programs tailored
to individual needs based on these evaluations. The company has not experienced a material cybersecurity or information
security breach in the last three years.
The company maintains a program, run by the company’s Vice President of Global Information Technology and Information
Security, overseen by the company’s Chief Financial Officer, that is designed to protect and preserve the confidentiality,
integrity and continued availability of all information owned by or in the care of the company. The company has implemented a
cybersecurity incident response plan that provides controls and procedures to facilitate timely and accurate reporting of any
material cybersecurity incident. The initial impact of each cybersecurity event is evaluated by a designated cybersecurity team
using established risk criteria. If a cybersecurity event meets certain of these criteria, it is escalated to an internal cross-
functional Cyber Incident Response Team and external incident responders. The company has a cyber incident disclosure
committee that evaluates and considers whether public disclosure of an event is required. The plan also contains procedures for
escalating cybersecurity incidents to the Board of Directors.
The company’s Vice President of Global Information Technology and Information Security is responsible for leading the
assessment and management of cybersecurity risks. The current Vice President of Global Information Technology and
Information Security has over 10 years of experience in information security and holds CISSP and GIAC credentials. The Vice
President of Global Information Technology and Information Security reports to the Audit Committee and management on
cybersecurity threats on a regular basis.
Oversight responsibility for information security matters is shared by the Board (primarily through the Audit Committee) and
senior management. The Audit Committee oversees the company’s cybersecurity and information security program and
receives periodic updates from senior management on cybersecurity and information security matters. The Vice President of
Global Information Technology and Information Security or key members of the executive leadership team update the Audit
Committee periodically on the cybersecurity landscape, including the status of ongoing threats and company initiatives.
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Item 2. Properties
The company's principal executive offices are located in Elgin, Illinois. The company operates forty-four manufacturing
facilities in the U.S. and thirty-eight manufacturing facilities internationally.
The principal properties of the company used to conduct business operations are listed below:
Commercial Foodservice:
Fort Smith, AR
Manufacturing, Warehousing and Offices
712,600
Leased
Aug-34
Chandler, AZ
Manufacturing and Offices
14,400
Owned
N/A
Brea, CA
Manufacturing, Warehousing and Offices
86,600
Leased
Sep-26
Corona, CA
Manufacturing and Offices
86,000
Owned
N/A
Vacaville, CA
Manufacturing, Warehousing and Offices
128,800
Leased
Nov-29
Windsor, CA
Manufacturing, Warehousing and Offices
75,000
Leased
Apr-32
Englewood, CO
Manufacturing, Warehousing and Offices
105,000
Owned
N/A
Louisville, CO
Manufacturing, Warehousing and Offices
37,700
Leased
Jul-28
Brooksville, FL
Manufacturing, Warehouses and Offices
18,000
Owned
N/A
Cape Coral, FL
Warehousing and Offices
14,500
Owned
N/A
Norcross, GA
Warehousing and Offices
15,400
Leased
Nov-26
Elgin, IL
Manufacturing, Warehousing and Offices
191,200
Owned
N/A
Mundelein, IL
Manufacturing, Warehousing and Offices
70,000
Owned
N/A
Rockton, IL
Manufacturing, Warehousing and Offices
339,400
Owned
N/A
South Beloit, IL
Warehousing
250,000
Leased
Mar-32
Danville, IN
Manufacturing and Offices
32,500
Owned
N/A
Menominee, MI
Manufacturing, Warehousing and Offices
60,000
Owned
N/A
Charlotte, NC
Manufacturing, Warehousing and Offices
47,000
Leased
Jan-34
Fuquay-Varina, NC
Manufacturing, Warehousing and Offices
183,900
Owned
N/A
Bow, NH
Manufacturing, Warehousing and Offices
100,000
Owned
N/A
Pembroke, NH
Warehousing
171,300
Leased
Dec-26
Dayton, OH
Manufacturing, Warehousing and Offices
37,700
Owned
N/A
Moraine, OH
Warehousing
38,300
Leased
Jun-27
Tualatin, OR
Manufacturing, Warehousing and Offices
29,500
Leased
May-28
Easton, PA
Manufacturing, Warehousing and Offices
246,700
Owned
N/A
Smithville, TN
Manufacturing, Warehousing and Offices
268,000
Owned
N/A
Carrollton, TX
Manufacturing, Warehousing and Offices
132,400
Leased
Aug-32
Essex Junction, VT*
Manufacturing, Warehousing and Offices
372,500
Owned
N/A
Renton, WA
Manufacturing, Warehousing and Offices
72,400
Leased
Sep-28
New South Wales, Australia
Manufacturing, Warehousing and Offices
200,100
Owned
N/A
Toronto, Canada*
Manufacturing, Warehousing and Offices
87,700
Owned
N/A
Ningbo, China
Manufacturing, Warehousing and Offices
64,300
Leased
Oct-25
Qingdao City, China
Manufacturing, Warehousing and Offices
113,500
Leased
Jul-29
Zhuhai City, China
Manufacturing, Warehousing and Offices
134,900
Leased
Dec-25
Brøndby, Denmark
Manufacturing, Warehousing and Offices
50,900
Owned
N/A
Randers, Denmark
Manufacturing, Warehousing and Offices
50,100
Owned
N/A
Viljandi, Estonia
Manufacturing and Offices
47,000
Owned
N/A
Dublin, Ireland
Manufacturing, Warehousing and Offices
6,300
Owned
N/A
Nusco, Italy
Manufacturing, Warehousing and Offices
260,600
Owned
N/A
Sedico, Italy
Manufacturing, Warehousing and Offices
52,500
Owned
N/A
Nogales, Mexico
Manufacturing, Warehousing and Offices
129,000
Owned
N/A
Wiślina, Poland
Manufacturing, Warehousing and Offices
77,500
Owned
N/A
Incheon, South Korea
Manufacturing, Warehousing and Offices
227,400
Owned
N/A
Pineda de Mar, Spain
Manufacturing, Warehousing and Offices
69,200
Owned
N/A
Arenys, Spain
Warehousing and Offices
63,500
Leased
Dec-41
Fristad, Sweden
Manufacturing, Warehousing and Offices
173,800
Owned
N/A
Location
Principal Function
Square Footage
Owned/Leased
Lease Expiration
24
Laguna, the Philippines
Manufacturing, Warehousing and Offices
115,200
Owned
N/A
Lincoln, the United Kingdom
Manufacturing, Warehousing and Offices
100,000
Owned
N/A
Food Processing:
Palmetto, FL
Manufacturing, Warehousing and Offices
61,300
Leased
Dec-30
Gainesville, GA
Manufacturing, Warehousing and Offices
107,400
Owned
N/A
Algona, IA
Manufacturing, Warehousing and Offices
70,100
Owned
N/A
Elgin, IL
Manufacturing, Warehousing and Offices
75,000
Owned
N/A
Elk Grove, IL
Manufacturing, Warehousing and Offices
101,500
Leased
Nov-29
Clayton, NC
Manufacturing, Warehousing and Offices
95,000
Leased
Oct-29
Maysville, OK
Manufacturing, Warehousing and Offices
100,300
Owned
N/A
Souderton, PA
Manufacturing, Warehousing and Offices
50,000
Owned
N/A
Columbia, TN
Manufacturing, Warehousing and Offices
125,700
Owned
N/A
Mansfield, TX
Manufacturing, Warehousing and Offices
46,200
Owned
N/A
Plano, TX
Manufacturing, Warehousing and Offices
339,100
Leased
Apr-25
Waynesboro, VA
Manufacturing, Warehousing and Offices
24,700
Owned
N/A
Lodi, WI
Manufacturing, Warehousing and Offices
114,600
Owned
N/A
Aalborg, Denmark
Manufacturing, Warehousing and Offices
68,300
Leased
Jan-26
Mauron, France
Manufacturing, Warehousing and Offices
107,200
Owned
N/A
Lunen, Germany
Manufacturing, Warehousing and Offices
22,800
Leased
Feb-29
Reichenau, Germany
Manufacturing, Warehousing and Offices
57,900
Owned
N/A
Bangalore, India
Manufacturing, Warehousing and Offices
141,100
Leased
Jul-30
Casarsa della Delizia, Italy
Manufacturing, Warehousing and Offices
279,200
Owned
N/A
Casarsa della Delizia, Italy
Manufacturing, Warehousing and Offices
67,300
Leased
May-33
Castelnuovo Rangone, Italy**
Manufacturing, Warehousing and Offices
37,900
Leased
Dec-26
Piumazzo, Italy
Manufacturing, Warehousing and Offices
37,200
Leased
May-30
Regio Emillia, Italy
Manufacturing, Warehousing and Offices
59,400
Owned
N/A
Vicenza. Italy
Manufacturing, Warehousing and Offices
53,500
Leased
Sep-32
Norwich, the United Kingdom
Manufacturing, Warehousing and Offices
43,500
Owned
N/A
Residential Kitchen:
Phenix City, AL
Warehousing and Offices
335,000
Leased
Dec-30
Phoenix, AZ
Manufacturing, Warehousing and Offices
65,400
Owned
N/A
Chino, CA
Warehousing and Offices
100,000
Leased
Apr-27
Buford, GA
Warehousing and Offices
178,100
Leased
Jun-28
Greenville, MI
Manufacturing, Warehousing and Offices
225,000
Owned
N/A
Greenwood, MS**
Manufacturing, Warehousing and Offices
658,100
Owned
N/A
York, PA
Warehousing and Offices
204,300
Leased
Jun-30
Brown Deer, WI
Manufacturing, Warehousing and Offices
155,700
Leased
Nov-26
Kuurne, Belgium
Manufacturing, Warehousing and Offices
242,300
Owned
N/A
Saint Ouen L'aumone, France
Manufacturing and Warehousing
30,400
Owned
N/A
Waterford, Ireland
Warehousing and Offices
73,000
Leased
Jul-27
Ketley, the United Kingdom
Manufacturing and Offices
217,300
Owned
N/A
Leamington Spa, the United Kingdom
Manufacturing and Offices
270,200
Owned
N/A
Leamington Spa, the United Kingdom
Manufacturing and Offices
100,300
Leased
Aug-29
Nottingham, the United Kingdom
Warehousing and Offices
153,100
Owned
N/A
Location
Principal Function
Square Footage
Owned/Leased
Lease Expiration
* Contains two separate manufacturing facilities.
** Contains three separate manufacturing facilities.
At various other locations, the company leases small amounts of space for administrative, manufacturing, distribution and sales
functions, and in certain instances limited short-term inventory storage. These locations are in Australia, Brazil, Canada, China,
Czech Republic, Denmark, Dubai, France, Germany, India, Italy, Mexico, Netherlands, Philippines, Spain, the United Kingdom
and various locations in the United States.
Management believes that these facilities are adequate for the operation of the company's business as presently conducted.
25
Item 3. Legal Proceedings
The company is routinely involved in litigation incidental to its business, including product liability claims, which are partially
covered by insurance or in certain cases by indemnification provisions under purchase agreements for recently acquired
companies. Such routine claims are vigorously contested and management does not believe that the outcome of any such
pending litigation will have a material effect upon the financial condition, results of operations or cash flows of the company.
Item 4. Mine Safety Issues
Not applicable.
26
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Principal Market
The company's Common Stock trades on the Nasdaq Global Select Market under the symbol "MIDD".
Stockholders
The company estimates there were approximately 100,425 record holders of the company's common stock as of February 24,
2025.
Dividends
The company does not currently pay cash dividends on its common stock. Any future payment of cash dividends on the
company’s common stock will be at the discretion of the company’s Board of Directors and will depend upon the company’s
results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by the Board of
Directors. The company’s Board of Directors currently intends to retain any future earnings to support its operations and to
finance the growth and development of the company’s business and does not intend to declare or pay cash dividends on its
common stock for the foreseeable future. In addition, the company’s revolving credit facility limits its ability to declare or pay
dividends on its common stock.
Securities Authorized for Issuance under Equity Compensation Plans
For information pertaining to securities authorized for issuance under equity compensation plans and the related weighted
average exercise price, see Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.”
Unregistered Sales of Equity Securities in connection with Strategic Transactions
On January 24, 2023, in connection with the company’s purchase of all of the capital stock of Flavor Burst Co., LLP (“Flavor
Burst”), the company issued 6,956 unregistered shares of the company’s common stock to Flavor Burst. The shares of company
common stock were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act. The
company relied on such exemption based in part upon representations made by Flavor Burst, including its status as an
accredited investor, as such term is defined in Rule 501 of the Securities Act.
On January 26, 2023, in connection with the company’s purchase of assets from Appliance Innovation, Inc ("Appliance"), the
company issued 27,395 unregistered shares of the company’s common stock to Appliance. The shares of company common
stock were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act. The company
relied on such exemption based in part upon representations made by Appliance, including its status as an accredited investor,
as such term is defined in Rule 501 of the Securities Act.
On April 3, 2023, in connection with the company’s purchase of all of the capital stock of Blue Sparq, Inc. (“Blue Sparq”), the
company issued 10,231 unregistered shares of the company’s common stock to Blue Sparq. The shares of company common
stock were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act. The company
relied on such exemption based in part upon representations made by Blue Sparq, including its status as an accredited investor,
as such term is defined in Rule 501 of the Securities Act.
On June 13, 2023, in connection with the company’s purchase of all of the capital stock of Filtration Automation, Inc.
(“Filtration Automation”), the company issued 49,916 unregistered shares of the company’s common stock to Filtration
Automation. The shares of company common stock were issued in reliance on the exemption from registration under Section
4(a)(2) of the Securities Act. The company relied on such exemption based in part upon representations made by Filtration
Automation, including its status as an accredited investor, as such term is defined in Rule 501 of the Securities Act.
On July 31, 2023, in connection with the company’s purchase of all of the capital stock of Trade-Wind Manufacturing, LLC
(“Trade-Wind”), the company issued 39,573 unregistered shares of the company’s common stock to Trade-Wind. The shares of
company common stock were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act.
The company relied on such exemption based in part upon representations made by Trade-Wind, including its status as an
accredited investor, as such term is defined in Rule 501 of the Securities Act.
27
On October 11, 2024, in connection with the company’s purchase of all of the capital stock of Emery Thompson (“Emery
Thompson”), the company issued 21,859 unregistered shares of the company’s common stock to Emery Thompson. The shares
of company common stock were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities
Act. The company relied on such exemption based in part upon representations made by Emery Thompson, including its status
as an accredited investor, as such term is defined in Rule 501 of the Securities Act.
On November 1, 2024, in connection with the company’s purchase of all of the capital stock of JC Ford (“JC Ford”), the
company issued 14,577 unregistered shares of the company’s common stock to JC Ford. The shares of company common stock
were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act. The company relied on
such exemption based in part upon representations made by JC Ford, including its status as an accredited investor, as such term
is defined in Rule 501 of the Securities Act.
Issuer Purchases of Equity Securities
Total
Number of
Shares
Purchased
Average
Price Paid
per Share
Total Number
of Shares Purchased as
Part of Publicly
Announced Plan or
Program
Maximum Number of
Shares that May Yet be
Purchased Under the
Plan or Program (1)
September 29, 2024 to October 26, 2024
— $
—
—
4,383,636
October 27, 2024 to November 23, 2024
13,675
136.52
13,675
4,369,961
November 24, 2024 to December 28, 2024
103,851
139.75
103,851
4,266,110
Quarter ended December 28, 2024
117,526 $
139.37
117,526
4,266,110
(1) On November 7, 2017, the company's Board of Directors resolved to terminate the company's existing share repurchase
program, effective as of such date, which was originally adopted in 1998, and approved a new stock repurchase program. This
program authorizes the company to repurchase in the aggregate up to 2,500,000 shares of its outstanding common stock. In
May 2022 and July 2024, the company's Board of Directors approved the company to repurchase an additional 2,500,000 shares
of its outstanding common stock under the current program. As of December 28, 2024, the total number of shares authorized
for repurchase under the program is 7,500,000. As of December 28, 2024, 3,233,890 shares had been purchased under the stock
repurchase program and 4,266,110 shares remained authorized for repurchase.
In the Consolidated Financial Statements, the company also treats shares withheld for tax purposes on behalf of employees in
connection with the vesting of restricted share grants as common stock repurchases because they reduce the number of shares
that would have been issued upon vesting. These withheld shares are not considered common stock repurchases under the
authorized common stock repurchase plan and accordingly are not included in the common stock repurchase totals in the
preceding table.
Item 6. [Reserved]
28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements
This report contains "forward-looking statements" subject to the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve known and unknown risks, uncertainties and other factors, which could cause the
company's actual results, performance or outcomes to differ materially from those expressed or implied in the forward-looking
statements. The following are some of the important factors that could cause the company's actual results, performance or
outcomes to differ materially from those discussed in the forward-looking statements:
•
changing market conditions;
•
the possibility that the proposed spin-off of the company’s Food Processing business will not be consummated within
the anticipated time period or at all and that the company may not realize all or any of the expected benefits of the
spin-off;
•
volatility in earnings resulting from goodwill impairment losses, which may occur irregularly and in varying amounts;
•
variability in financing costs;
•
quarterly variations in operating results;
•
dependence on key customers;
•
risks associated with the company's foreign operations, including market acceptance and demand for the company's
products and the company's ability to manage the risk associated with the exposure to foreign currency exchange rate
fluctuations;
•
the company's ability to protect its trademarks, copyrights and other intellectual property;
•
the impact of competitive products and pricing;
•
the impact of announced management and organizational changes;
•
the state of the residential construction, housing and home improvement markets;
•
the state of the credit markets, including mortgages, home equity loans and consumer credit;
•
intense competition in the company's business segments including the impact of both new and established global
competitors;
•
unfavorable tax law changes and tax authority rulings;
•
cybersecurity attacks and other breaches in security;
•
the continued ability to realize profitable growth through the sourcing and completion of strategic acquisitions;
•
the timely development and market acceptance of the company's products; and
•
the availability and cost of raw materials.
The company cautions readers to carefully consider the statements set forth in the section entitled "Item 1A. Risk Factors" of
this filing and discussion of risks included in the company's SEC filings.
29
Proposed Separation Transaction
On February 25, 2025, the company announced its intent to separate its Food Processing business through a spin-off of the
Food Processing business, under which the stock of Food Processing, as a new independent publicly traded company, will be
distributed to Middleby’s shareholders. As of the date hereof, Middleby is targeting completion of the separation by early 2026,
subject to certain customary conditions, including, among others, final approval by the company’s Board of Directors and the
effectiveness of appropriate filings with the SEC. The spin-off of Food Processing is expected to be tax-free for U.S. federal
income tax purposes. There can be no assurance that any separation transaction will ultimately occur or, if one does occur, of its
terms or timing.
Current Events
Inflation and Interest Rate Environment
The company has been negatively impacted by inflation in wages, logistics, energy, raw materials and component costs. Price
increases and pricing strategies have been implemented to mitigate the impact of cost inflation on margins and the company
continues to actively monitor costs. High inflation and uncertainty surrounding the Federal Reserve's interest rate policy
decisions let to increased interest rates in 2023 and into the first quarter of 2024, which combined with global macroeconomic
uncertainty, has and may continue to impact customer demand. Even in light of such headwinds, we remain focused on
delivering strong financial results and executing on our long-term strategy and profitability objectives.
Supply Chain, Labor and Logistics Constraints
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. While the company is seeing improvement on
certain supply chain and logistics constraints, supply chains for certain key components remain distressed. The decreased
availability of resources and inflationary costs resulted in heightened inventory levels for certain components above current
demand levels. To combat these pressures, the company has evaluated alternative sourcing, dual sourcing and collaborated
across the organization, where appropriate, without materially presenting new risks or increasing current risks around quality
and reliability. Our capital resources have been and the company expects they will continue to be sufficient to address these
challenges.
NET SALES SUMMARY
(dollars in thousands)
Fiscal Year Ended(1)
2024
2023
2022
Sales
Percent
Sales
Percent
Sales
Percent
Business Segments:
Commercial Foodservice
$ 2,419,236
62.4 %
$ 2,521,471
62.5 %
$ 2,394,762
59.4 %
Food Processing
$ 731,003
18.9
$ 720,618
17.8
$ 589,969
14.6
Residential Kitchen
$ 724,923
18.7
$ 794,516
19.7
$ 1,048,122
26.0
Total
$ 3,875,162
100.0 %
$ 4,036,605
100.0 %
$ 4,032,853
100.0 %
(1)
The company's fiscal year ends on the Saturday nearest to December 31.
30
Results of Operations
The following table sets forth certain items in the consolidated statements of earnings as a percentage of net sales for the
periods presented:
Fiscal Year Ended(1)
2024
2023
2022
Net sales
100.0 %
100.0 %
100.0 %
Cost of sales
62.1
62.0
64.1
Gross profit
37.9
38.0
35.9
Selling, general and administrative expenses
19.7
20.0
19.8
Restructuring
0.3
0.4
0.2
Impairments
1.0
1.9
—
Income from operations
16.9
15.7
15.9
Interest expense and deferred financing amortization, net
2.4
3.0
2.2
Net periodic pension benefit (other than service cost & curtailment)
(0.4)
(0.2)
(1.0)
Other expense, net
—
0.1
0.7
Earnings before income taxes
14.9
12.8
14.0
Provision for income taxes
3.8
2.9
3.2
Net earnings
11.1 %
9.9 %
10.8 %
(1)
The company's fiscal year ends on the Saturday nearest to December 31.
31
Fiscal Year Ended December 28, 2024 as Compared to December 30, 2023
NET SALES. Net sales in fiscal 2024 decreased by $161.4 million, or 4.0%, to $3,875.2 million as compared to $4,036.6
million in fiscal 2023. Net sales increased by $29.7 million, or 0.7%, from the fiscal 2023 acquisitions of Flavor Burst, Blue
Sparq, Filtration Automation, Terry, and Trade-Wind and the fiscal 2024 acquisitions of GBT, MaxMac, Emery Thompson, JC
Ford, and Gorreri. Excluding acquisitions, net sales decreased $191.1 million, or 4.7%, from fiscal 2023. The impact of foreign
exchange rates on foreign sales translated into U.S. Dollars in fiscal 2024 increased net sales by approximately $0.5 million.
Excluding the impact of foreign exchange and acquisitions, sales decreased 4.7% for the year, including a net sales decrease of
4.1% at the Commercial Foodservice Equipment Group, a net sales decrease of 1.9% at the Food Processing Equipment Group
and a net sales decrease of 9.5% at the Residential Kitchen Equipment Group.
•
Net sales of the Commercial Foodservice Equipment Group decreased by $102.2 million, or 4.1%, to $2,419.3 million
in fiscal 2024, as compared to $2,521.5 million in fiscal 2023. Net sales from the acquisitions of Flavor Burst, Blue
Sparq, Terry, and Emery Thompson accounted for an increase of $2.8 million during fiscal 2024. Excluding the impact
of acquisitions, net sales of the Commercial Foodservice Equipment Group decreased $105.0 million, or 4.2%, as
compared to fiscal 2023. Excluding the impact of foreign exchange and acquisitions, net sales decreased $102.3
million, or 4.1%, at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales
decrease of $118.0 million, or 6.5%, to $1,710.4 million, as compared to $1,828.4 million in fiscal 2023. This includes
an increase of $2.7 million from recent acquisitions. Excluding acquisitions, the net decrease in domestic sales was
$120.7 million, or 6.6%. The decrease in domestic sales is related to slow market conditions. International sales
increased $15.8 million, or 2.3%, to $708.9 million, as compared to $693.1 million in the prior year. This includes an
increase of $0.1 million from the recent acquisitions and a decrease of $2.7 million related to the unfavorable impact of
exchange rates. Excluding the impact of foreign exchange and acquisitions, the net sales increase in international sales
was $18.4 million, or 2.7%. The increase in international revenues is related to improvements in market conditions,
primarily in the European and Latin American markets.
•
Net sales of the Food Processing Equipment Group increased by $10.4 million, or 1.4%, to $731.0 million in fiscal
2024, as compared to $720.6 million in fiscal 2023. Net sales from the acquisitions of Filtration Automation, GBT,
MaxMac, JC Ford, and Gorreri accounted for an increase of $24.7 million during fiscal 2024. Excluding the impact of
acquisitions, net sales of the Food Processing Equipment Group decreased $14.3 million, or 2.0%, as compared to
fiscal 2023. Excluding the impact of foreign exchange and acquisitions, net sales decreased $13.9 million, or 1.9%, at
the Food Processing Equipment Group. Domestically, the company realized a sales decrease of $35.9 million, or 7.5%,
to $443.4 million, as compared to $479.3 million in fiscal 2023. This includes an increase of $7.3 million from recent
acquisitions. Excluding acquisitions, the net decrease in domestic sales was $43.2 million, or 9.0%. The decrease in
domestic sales is driven primarily by lower sales volumes of protein products. International sales increased $46.3
million, or 19.2%, to $287.6 million, as compared to $241.3 million in the prior year. This includes an increase of
$17.4 million from the recent acquisitions and a decrease of $0.4 million related to the unfavorable impact of exchange
rates. Excluding the impact of foreign exchange and acquisitions, the net sales increase in international sales was $29.3
million, or 12.1%. The increase in international sales reflects growth driven primarily by increased sales volumes of
bakery and protein products in the European markets.
•
Net sales of the Residential Kitchen Equipment Group decreased by $69.6 million, or 8.8%, to $724.9 million in fiscal
2024, as compared to $794.5 million in fiscal 2023. Excluding the impact of the acquisition of Trade-Wind, net sales
decreased $71.8 million, or 9.0%. Excluding the impact of foreign exchange, net sales decreased $75.4 million, or
9.5%, at the Residential Kitchen Equipment Group. Domestically, the company realized a sales decrease of $52.2
million, or 10.2%, to $461.1 million, as compared to $513.3 million in fiscal 2023. Excluding the acquisition, the net
decrease in domestic sales was $54.4 million, or 10.6%. International sales decreased $17.4 million, or 6.2%, to $263.8
million, as compared to $281.2 million in the prior year. This includes an increase of $3.6 million related to the
favorable impact of exchange rates. Excluding the impact of foreign exchange and the acquisition, the net sales
decrease in international sales was $21.0 million, or 7.5%. The decrease in net sales was primarily driven by
challenging market conditions domestically and in the European markets.
32
GROSS PROFIT. Gross profit decreased to $1,470.4 million in fiscal 2024 as compared to $1,534.1 million in fiscal 2023,
primarily driven by lower sales volumes at the Commercial Foodservice Equipment Group and Residential Kitchen Equipment
Group. The impact of foreign exchange rates increased gross profit by approximately $0.3 million. The gross margin rate was
37.9% in 2024 as compared to 38.0% in 2023.
•
Gross profit at the Commercial Foodservice Equipment Group decreased by $52.3 million, or 5.2%, to $958.3 million
in fiscal 2024, as compared to $1,010.6 million in fiscal 2023. Gross profit from the acquisitions of Flavor Burst, Blue
Sparq, Terry, and Emery Thompson increased gross profit by $1.5 million. Excluding acquisitions, gross profit
decreased by $53.8 million related to lower sales volume. The impact of foreign exchange rates decreased gross profit
by approximately $0.7 million. The gross margin rate increased to 39.6%, as compared to 40.1% in fiscal 2023. The
gross margin rate, excluding acquisitions and the impact of foreign exchange, was 39.6%.
•
Gross profit at the Food Processing Equipment Group increased by $16.2 million, or 5.9%, to $290.6 million in fiscal
2024, as compared to $274.4 million in fiscal 2023. Gross profit from the acquisitions of Filtration Automation, GBT,
MaxMac, JC Ford, and Gorreri increased gross profit by $9.7 million. Excluding acquisitions, gross profit increased by
$6.5 million related to improved product mix and acquisition integration benefits. The impact of foreign exchange
rates decreased gross profit by approximately $0.1 million. The gross margin rate increased to 39.8%, as compared to
38.1% in fiscal 2023 primarily related to improved product mix. The gross margin rate, excluding acquisitions and the
impact of foreign exchange, was 39.8%.
•
Gross profit at the Residential Kitchen Equipment Group decreased by $31.4 million, or 12.6%, to $218.6 million in
fiscal 2024, as compared to $250.0 million in fiscal 2023. Excluding the impact of the acquisition, gross profit
decreased by $32.5 million related to lower sales volume. The impact of foreign exchange rates increased gross profit
by approximately $1.1 million. The gross margin rate decreased to 30.2%, as compared to 31.5% in fiscal 2023
primarily related to lower sales volume. The gross margin rate, excluding the acquisition and impact of foreign
exchange, was 30.1%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses
decreased to $762.5 million in fiscal 2024, as compared to $806.9 million in fiscal 2023. As a percentage of net sales, selling,
general, and administrative expenses were 19.7% in fiscal 2024, as compared to 20.0% in fiscal 2023.
Selling, general and administrative expenses reflect increased costs of $8.9 million associated with acquisitions, including
$1.6 million of intangible amortization expense. Selling, general and administrative expenses decreased $31.2 million related to
compensation cost including commissions, $12.3 million related to intangible amortization expense and $10.9 million in
professional fees. Foreign exchange rates had a favorable impact of $0.3 million.
RESTRUCTURING EXPENSES. Restructuring expenses increased $0.1 million to $14.2 million in fiscal 2024 from $14.1
million in fiscal 2023. Restructuring expenses in fiscal 2024 related primarily to headcount reductions and facility
consolidations within all three segments. Restructuring expenses in fiscal 2023 related primarily to headcount reductions and
facility consolidations within the Residential Kitchen Equipment Group and Commercial Foodservice Equipment Group.
IMPAIRMENTS. In fiscal 2024, the company recognized non-cash impairment of $33.4 million primarily associated with
several trademarks in the Residential Kitchen Equipment Group, as well as a few in the Commercial Foodservice Group in
conjunction with diminution of values as we assessed recent market conditions and future business plans. In addition, the
company recorded an impairment charge of approximately $5.2 million associated with the decline in recoverable value of an
equity method investment. In fiscal 2023, the company recognized non-cash impairment of $78.1 million primarily associated
with several trademarks in the Residential Kitchen Equipment Group in conjunction with diminution of values as we assessed
recent market conditions and future business plans. See Note 3(f) to the Consolidated Financial Statements for further
information on the annual impairment testing.
INCOME FROM OPERATIONS. Income from operations increased $21.3 million to $656.2 million in fiscal 2024 from
$634.9 million in fiscal 2023. Operating income as a percentage of net sales amounted to 16.9% in 2024 as compared to 15.7%
in 2023. During fiscal 2024 and fiscal 2023, operating income included the impairment of intangible assets. Excluding the
impairments, the decrease in operating income was primarily related to lower sales volume.
Income from operations in 2024 included $194.8 million of non-cash expenses, including $55.6 million of depreciation
expense, $64.4 million of intangible amortization related to acquisitions, $38.6 million of impairments and $36.2 million of
stock based compensation. This compares to $254.5 million of non-cash expenses in the prior year, including $50.4 million of
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depreciation expense, $75.0 million of intangible amortization related to acquisitions, $78.1 million of impairments and $51.0
million of stock based compensation costs.
NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $92.2 million in fiscal 2024, as
compared to $120.3 million in fiscal 2023, reflecting the decrease in net debt levels. Net periodic pension benefit (other than
service costs) increased $5.8 million to $14.9 million in fiscal 2024, as compared to $9.1 million in fiscal 2023, related to the
decrease in discount rate used to calculate the interest cost and increase in expected return on assets as a result of the higher
assets value. Other expense was $1.5 million in fiscal 2024, as compared to $4.2 million in fiscal 2023 and consists mainly of
foreign exchange gains and losses.
INCOME TAXES. A tax provision of $148.9 million, at an effective rate of 25.8%, was recorded during fiscal 2024, as
compared to $118.5 million at an effective rate of 22.8%, in fiscal 2023. The fiscal 2024 provision includes a $3.6 million net
tax expense for the finalization of the 2023 tax returns as compared to the fiscal 2023 provision that included a net tax benefit
of $7.0 million for the finalization of the 2022 tax returns. The effective tax rates in 2024 and 2023 were higher than the federal
tax rate of 21% primarily due to state taxes and foreign tax rate differentials.
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Fiscal Year Ended December 30, 2023 as Compared to December 31, 2022
NET SALES. Net sales in fiscal 2023 increased by $3.7 million, or 0.1%, to $4,036.6 million as compared to $4,032.9 million
in fiscal 2022. Net sales increased by $121.3 million, or 3.0%, from the fiscal 2022 acquisitions of Kloppenberg, Proxaut,
Icetro, CP Packaging, Colussi Ermes, Escher, Marco, and the fiscal 2023 acquisitions of Flavor Burst, Blue Sparq, Filtration
Automation, Terry, and Trade-Wind. Excluding acquisitions, net sales decreased $117.6 million, or 2.9%, from the prior year.
The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for fiscal 2023 increased net sales by
approximately $12.3 million. Excluding the impact of foreign exchange and acquisitions, sales decreased 3.2% for the year,
including a net sales increase of 2.7% at the Commercial Foodservice Equipment Group, a net sales increase of 10.7% at the
Food Processing Equipment Group and a net sales decrease of 24.7% at the Residential Kitchen Equipment Group.
•
Net sales of the Commercial Foodservice Equipment Group increased by $126.7 million, or 5.3%, to $2,521.5
million in fiscal 2023 as compared to $2,394.8 million in fiscal 2022. Net sales from the acquisitions of
Kloppenberg, Icetro, Marco, Flavor Burst, Blue Sparq, and Terry accounted for an increase of $57.8 million
during fiscal 2023. Excluding the impact of acquisitions, net sales of the Commercial Foodservice Equipment
Group increased $68.9 million, or 2.9%, as compared to the prior year. Excluding the impact of foreign exchange
and acquisitions, net sales increased $65.8 million, or 2.7% at the Commercial Foodservice Equipment Group.
Domestically, the company realized a sales increase of $77.4 million, or 4.4%, to $1,828.4 million, as compared to
$1,751.0 million in the prior year. This includes an increase of $24.9 million from recent acquisitions. Excluding
acquisitions, the net increase in domestic sales was $52.5 million, or 3.0%. The increase in domestic sales is
related to higher shipments, improved product mix and pricing increases. International sales increased $49.3
million, or 7.7%, to $693.1 million, as compared to $643.8 million in the prior year. This includes the increase of
$32.9 million from recent acquisitions and an increase of $3.1 million related to the favorable impact of exchange
rates. Excluding acquisitions and foreign exchange, the net sales increase in international sales was $13.3 million,
or 2.1%. The increase in international sales is related to improvements in market conditions, primarily in the Asia
and Latin American markets.
•
Net sales of the Food Processing Equipment Group increased by $130.6 million, or 22.1%, to $720.6 million in
fiscal 2023, as compared to $590.0 million in fiscal 2022. Net sales from the acquisitions of CP Packaging,
Colussi Ermes, Escher, and Filtration Automation accounted for an increase of $61.5 million during fiscal 2022.
Excluding the impact of acquisitions, net sales of the Food processing Equipment Group increased $69.1 million,
or 11.7%, as compared to the prior year. Excluding the impact of foreign exchange and acquisitions, net sales
increased $63.4 million, or 10.7% at the Food Processing Equipment Group. Domestically, the company realized a
sales increase of $53.1 million, or 12.5%, to $479.3 million, as compared to $426.2 million in the prior year. This
includes an increase of $23.7 million from recent acquisitions. Excluding acquisitions, the net increase in domestic
sales was $29.4 million, or 6.9%. The increase in domestic sales reflects growth primarily driven by protein
products. International sales increased $77.5 million, or 47.3%, to $241.3 million, as compared to $163.8 million
in the prior year. This includes the increase of $37.8 million from recent acquisitions and an increase of $5.7
million related to the favorable impact of exchange rates. Excluding acquisitions and foreign exchange, the net
sales increase in international sales was $34.0 million, or 20.8%. The increase in international sales reflects
growth primarily driven by bakery products.
•
Net sales of the Residential Kitchen Equipment Group decreased by $253.6 million, or 24.2%, to $794.5 million
in fiscal 2023, as compared to $1,048.1 million in fiscal 2022. Excluding the impact of the acquisition of Trade-
Wind, acquired July 31, 2023, net sales decreased $255.6 million, or 24.4%, as compared to the prior year.
Excluding the impact of foreign exchange and the acquisition, net sales decreased $259.1 million, or 24.7% at the
Residential Kitchen Equipment Group. Domestically, the company realized a sales decrease of $188.6 million, or
26.9%, to $513.3 million, as compared to $701.9 million in the prior year. Excluding the acquisition, the net
decrease in domestic sales was $190.0 million, or 27.1%. International sales decreased $65.0 million, or 18.8% to
$281.2 million, as compared to $346.2 million in the prior year. This includes an increase of $3.5 million related
to the favorable impact of exchange rates. Excluding the acquisition and foreign exchange, the net sales decrease
in international sales was $69.1 million, or 20.0%. The decrease in domestic and international sales was driven by
challenging market conditions and higher inventory levels in various channels.
.
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GROSS PROFIT. Gross profit increased by $87.5 million to $1,534.1 million in fiscal 2023 from $1,446.6 million in fiscal
2022, primarily reflecting higher sales volumes at the Commercial Foodservice Equipment Group and Food Processing
Equipment Group. The impact of foreign exchange rates increased gross profit by $3.9 million. The gross profit margin rate
increased to 38.0% in 2023 as compared to 35.9% in 2022. The gross margin in fiscal 2022 was negatively impacted by
inventory step-up charges associated with acquisitions. In addition, higher sales volumes and improved product mix have
contributed to the expansion of the gross margin rate. The gross margin rate in fiscal 2023 excluding acquisitions and impact of
foreign exchange was 38.1%.
•
Gross profit at the Commercial Foodservice Equipment Group increased by $101.2 million, or 11.1%, to $1,010.6
million in fiscal 2023 as compared to $909.4 million in fiscal 2022. Gross profit from acquisitions increased gross
profit by $20.8 million. Excluding acquisitions, gross profit increased by $80.4 million. The impact of foreign
exchange rates increased gross profit by approximately $0.4 million. The gross profit margin rate increased to
40.1% in fiscal 2023 as compared to 38.0% in the prior year related to higher sales volumes and improved product
mix. The gross profit margin rate in fiscal 2023 excluding acquisitions and the impact of foreign exchange was
40.2%.
•
Gross profit at the Food Processing Equipment Group increased by $61.8 million, or 29.1%, to $274.4 million in
fiscal 2023 as compared to $212.6 million in fiscal 2022. Gross profit from acquisitions increased gross profit by
$23.1 million. Excluding acquisitions, gross profit increased by $38.7 million. The impact of foreign exchange
rates increased gross profit by approximately $2.3 million. The gross profit margin rate increased to 38.1% in
fiscal 2023 as compared to 36.0% in the prior year related to higher sales volumes, improved product mix and
acquisition integration benefits. The gross profit margin rate in fiscal 2023 excluding the impact of foreign
exchange was 38.1%.
•
Gross profit at the Residential Kitchen Equipment Group decreased by $75.8 million, or 23.3%, to $250.0 million
in fiscal 2023 as compared to $325.8 million in fiscal 2022. The impact of foreign exchange rates increased gross
profit by approximately $1.2 million. The gross margin rate increased to 31.5% in fiscal 2023 as compared to
31.1% in the prior year. Gross profit margins in the prior year were negatively impacted by acquisitions,
including $15.1 million of acquisition related inventory step-up charges. The gross profit margin rate in fiscal
2023 excluding the acquisition and the impact of foreign exchange was 31.4%.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Combined selling, general, and administrative expenses
increased by $9.7 million to $806.9 million in fiscal 2023 from $797.2 million in 2022. As a percentage of net sales, selling,
general and administrative expenses amounted to 20.0% in fiscal 2023 and 19.8% in fiscal 2022.
Selling, general and administrative expenses reflect increased costs of $33.6 million associated with acquisitions, including
$5.6 million of non-cash intangible amortization expense. Selling, general and administrative expenses reflect decreases in
intangible amortization expense of $16.8 million, compensation costs including commissions of $7.8 million, and professional
fees of $5.4 million. These decreases were partially offset by $8.5 million attributed to higher selling and marketing expenses.
Foreign exchange rates had an unfavorable impact of $2.2 million.
RESTRUCTURING EXPENSES. Restructuring expenses increased $4.4 million to $14.1 million from $9.7 million in the
prior year period. In fiscal 2023, restructuring expenses related primarily to headcount reductions and facility consolidations
within the Commercial Foodservice Equipment Group and Residential Kitchen Equipment Group. During fiscal 2022,
restructuring charges related primarily to non-cash restructuring valuation allowances on balances associated with activities in
Russia and headcount reductions and facility consolidations within the Commercial Foodservice Equipment Group and
Residential Kitchen Equipment Group.
IMPAIRMENTS. In fiscal 2023, the company recognized non-cash impairment of $78.1 million primarily associated with
several trademarks in the Residential Kitchen Equipment Group in conjunction with diminution of values as we assessed recent
market conditions and future business plans. See Note 3(f) to the Consolidated Financial Statements for further information on
the annual impairment testing.
INCOME FROM OPERATIONS. Income from operations decreased $4.7 million to $634.9 million in fiscal 2023 from
$639.6 million in fiscal 2022. Operating income as a percentage of net sales amounted to 15.7% in 2023 as compared to 15.9%
in 2022. During fiscal 2023, operating income included the impairment of intangible assets. Excluding the impairment, the
increase in operating income resulted from increased profitability driven by product mix and execution of strategic cost
initiatives.
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Income from operations in 2023 included $254.5 million of non-cash expenses, including $50.4 million of depreciation
expense, $75.0 million of intangible amortization related to acquisitions, $78.1 million of impairments of trademarks and $51.0
million of stock based compensation. This compares to $189.3 million of non-cash expenses in the prior year, including $44.6
million of depreciation expense, $86.3 million of intangible amortization related to acquisitions and $58.4 million of stock
based compensation costs.
NON-OPERATING EXPENSES. Non-operating expenses increased $40.2 million to $115.4 million of expense in fiscal 2023
from $75.2 million of expense in fiscal 2022. Net interest expense and deferred financing increased $31.3 million to $120.3
million in fiscal 2023 from $89.0 million in fiscal 2022 reflecting the increase in interest rates under our current credit facility.
Net periodic pension benefit (other than service costs and curtailment) decreased $33.6 million to $9.1 million in fiscal 2023
from $42.7 million in fiscal 2022 related to the increase in discount rate used to calculate the interest cost. Other expense was
$4.2 million during fiscal 2023 as compared to other expense of $28.9 million during fiscal 2022, consisting mainly of foreign
exchange losses and gains.
INCOME TAXES. A tax provision of $118.5 million, at an effective rate of 22.8%, was recorded for fiscal 2023 as compared
to $127.8 million at an effective rate of 22.7%, in fiscal 2022. The fiscal 2023 tax provision includes a $7.0 million tax benefit
for the finalization of the 2022 tax returns. The fiscal 2022 tax provision included a deferred tax benefit of approximately $13
million associated with legal entity restructuring the company undertook to integrate and simplify the company’s business
operations. The effective rates in 2023 and 2022 were higher than the federal tax rate of 21% primarily due to state taxes and
foreign tax rate differentials.
Financial Condition and Liquidity
Total cash and cash equivalents increased by $442.0 million to $689.5 million at December 28, 2024 from $247.5 million at
December 30, 2023. Total debt amounted to $2.4 billion at December 28, 2024 and December 30, 2023.
OPERATING ACTIVITIES. Net cash provided by operating activities after changes in assets and liabilities amounted to
$686.8 million as compared to $628.8 million in the prior year.
During fiscal 2024, working capital changes contributed to operating cash flows primarily driven by decreased inventory levels
of $95.4 million, offset by an increase in prepaid expenses and other assets of $45.5 million, including impacts from the timing
of payments and status of over-time revenue contracts, and a decrease in accounts payable of $21.9 million.
In connection with the company’s acquisition activities, the company added assets and liabilities from the opening balance
sheets of the acquired businesses in its consolidated balance sheets and accordingly these amounts are not reflected in the net
changes in working capital.
INVESTING ACTIVITIES. During fiscal 2024, net cash used for investing activities amounted to $158.5 million. Cash used
to fund acquisitions amounted to $111.7 million. Additionally, $49.3 million was expended, primarily for upgrades of
production equipment and manufacturing facilities. Proceeds from the sale of property, plant and equipment amounted to $2.5
million.
FINANCING ACTIVITIES. Net cash flows used for financing activities amounted to $73.8 million in 2024. The company’s
borrowing activities during 2024 included $32.8 million of net repayments under its Credit Facility. Additionally, the company
repurchased $34.7 million of Middleby common shares during 2024. This was comprised of $18.3 million to repurchase
118,171 shares of Middleby common stock that were surrendered to the company for withholding taxes related to restricted
stock vestings and $16.4 million used to repurchase 117,526 shares of its common stock under a repurchase program.
At December 28, 2024, the company was in compliance with all covenants pursuant to its borrowing agreements. The company
believes that its current capital resources, including cash and cash equivalents, cash expected to be generated from operations,
funds available from its current lenders and access to the credit and capital markets will be sufficient to finance its operations,
debt service obligations, capital expenditures, product development and expenditures for the foreseeable future.
Material Cash Requirements
The company's material cash requirements from contractual obligations primarily consist of long-term debt obligations,
operating lease obligations, tax obligations and contingent purchase price payments to the sellers that were deferred in
conjunction with various acquisitions. See Notes 3, 5 and 7 to the Consolidated Financial Statements for further information.
37
Related Party Transactions
From December 31, 2023, through the date hereof, there were no transactions between the company, its directors and executive
officers that are required to be disclosed pursuant to Item 404 of Regulation S-K, promulgated under the Securities and
Exchange Act of 1934, as amended.
Critical Accounting Policies and Estimates
Management's discussion and analysis of financial condition and results of operations are based upon the company's
consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the company to make significant estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses as well as related disclosures. On an ongoing basis,
the company evaluates its estimates and judgments based on historical experience and various other factors that are believed to
be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions
and any such differences could be material to our consolidated financial statements.
Revenue Recognition
Revenue is recognized when the control of the promised goods or services are transferred to our customers, in an amount that
reflects the consideration that we expect to receive in exchange for those goods or services.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and represents the unit
of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when,
or as, the performance obligation is satisfied. The company’s contracts can have multiple performance obligations or just a
single performance obligation. For contracts with multiple performance obligations, the contract’s transaction price is allocated
to each performance obligation using the company’s best estimate of the standalone selling price of each distinct good or
service in the contract.
Within the Commercial Foodservice Equipment and Residential Foodservice Equipment Groups, the estimated standalone
selling price of equipment is based on observable prices. Within the Food Processing Equipment Group, the company estimates
the standalone selling price based on expected cost to manufacture the good or complete the service plus an appropriate profit
margin.
Control may pass to the customer over time or at a point in time. In general, the Commercial Foodservice Equipment and
Residential Foodservice Equipment Groups recognize revenue at the point in time control transfers to their customers based on
contractual shipping terms. Revenue from equipment sold under our long-term contracts within the Food Processing Equipment
group is recognized over time as the equipment is manufactured and assembled. Installation services provided in connection
with the delivery of the equipment are also generally recognized as those services are rendered. Over time transfer of control is
measured using an appropriate input measure (e.g., costs incurred or direct labor hours incurred in relation to total estimate).
These measures include forecasts based on the best information available and therefore reflect the company's judgment to
faithfully depict the transfer of the goods.
Inventories
Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method for the majority of the
company’s inventories. The company evaluates the need to record valuation adjustments for inventory on a regular basis. The
company’s policy is to evaluate all inventories including raw material, work-in-process, finished goods, and spare
parts. Inventory in excess of estimated usage requirements is written down to its estimated net realizable value. Inherent in the
estimates of net realizable value are estimates related to our future manufacturing schedules, customer demand, possible
alternative uses, and ultimate realization of potentially excess inventory.
Goodwill and Indefinite-Life Intangibles
The company’s business acquisitions result in the recognition of goodwill and other intangible assets, which are a significant
portion of the company’s total assets. Goodwill represents the excess of acquisition costs over the fair value of the net tangible
assets and identifiable intangible assets acquired in a business combination. Identifiable intangible assets are recognized
separately from goodwill and include trademarks and trade names, technology, customer relationships and other specifically
identifiable assets. Trademarks and trade names are deemed to be indefinite-lived. Goodwill and indefinite-lived intangible
assets are not amortized but are subject to impairment testing.
38
On an annual basis on the first day of the fourth quarter, or more frequently if triggering events occur, the company performs an
impairment assessment for goodwill and indefinite-lived intangible assets. The company considers qualitative factors to assess
if it is more likely than not that the fair value of goodwill and indefinite-lived intangible assets is below the carrying value.
In conducting a qualitative assessment, the company analyzes a variety of events or factors that may influence the fair value of
the reporting unit including, but not limited to: the results of prior quantitative assessments performed; changes in the carrying
amount of the reporting unit; actual and projected revenue and operating margin; relevant market data for both the company and
its peer companies; industry outlooks; macroeconomic conditions; liquidity; changes in key personnel; and the company's
competitive position. Significant judgment is used to evaluate the totality of these events and factors to make the determination
of whether it is more likely than not that the fair value of the reporting unit or indefinite-life intangible is less than its carrying
value.
Goodwill Valuations
The reporting units at which we test goodwill for impairment are our operating segments. These consist of the Commercial
Foodservice Equipment Group, the Food Processing Equipment Group and the Residential Kitchen Equipment Group. If the
fair value is less than its carrying value, an impairment loss, if any, is recorded for the difference between the implied fair value
and the carrying value of goodwill.
In performing a quantitative assessment, if required, the company estimates each reporting unit's fair value under an income
approach using a discounted cash flow model. The income approach uses each reporting unit's projection of estimated operating
results and cash flows that are discounted using a market participant discount rate based on a weighted-average cost of capital.
The financial projections reflect management's best estimate of economic and market conditions over the projected period
including forecasted revenue growth, operating margins, tax rate, capital expenditures, depreciation, amortization and changes
in working capital requirements. Other assumptions include discount rate and terminal growth rate. The estimated fair value of
each reporting unit is compared to their respective carrying values.
As a result of the financial performance indicators for the Residential Kitchen reporting unit, the company deemed it necessary
to complete a quantitative analysis. The fair value of the reporting unit exceeded its carrying value by more than 8%, thus no
impairment of goodwill was recognized. The company believes the assumptions utilized within the quantitative analysis are
reasonable and consistent with assumptions that would be used by other marketplace participants. Such assumptions are,
however, inherently uncertain, and different assumptions could lead to a different assessment for the reporting unit that could
result in a material impairment that would adversely affect our results of operations.
As a result of the qualitative assessment for the other two reporting units, the company determined it is more likely than not that
the fair value of our reporting units are greater than the carrying amounts.
In estimating the fair value of its reporting units, management relies on a number of factors, including operating results,
business plans, economic projections, anticipated future cash flows, comparable transactions and other market data. There are
inherent uncertainties related to these factors and management’s judgment in applying them in the impairment tests of goodwill.
If actual results are not consistent with management's estimate and assumptions, a material impairment could have an adverse
effect on the company's financial condition and results of operations.
Indefinite-Life Intangible Valuations
In performing a quantitative assessment of indefinite-life intangible assets other than goodwill, primarily trademarks and trade
names, we analyze the variety of events or factors that may impact the fair value of the indefinite-life intangible, including, but
not limited to: macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and
other relevant factors. We estimate the fair value of these intangible assets using the relief-from-royalty method which requires
assumptions related to projected revenues from our long-range plans; assumed royalty rates that could be payable if we did not
own the trademark; and a discount rate using a market based weighted-average cost of capital. If the estimated fair value of the
indefinite-life intangible asset is less than its carrying value, we would recognize an impairment loss.
Based on the qualitative assessment as of September 29, 2024, the company identified several trademarks and trade names with
indicators of potential risk for impairment and performed quantitative assessments. In performing the quantitative analysis on
these trademark assets, significant assumptions used in our relief-from-royalty model included revenue growth rates, assumed
royalty rates and the discount rate, which are discussed further below.
•
Revenue growth rates relate to projected revenues from our long-range plans and vary from brand to brand. Adverse
changes in the operating environment or our inability to grow revenues at the forecasted rates may result in a material
impairment charge.
39
•
In determining royalty rates for the valuation of our trademarks, we considered factors that affect the assumed royalty
rates that would hypothetically be paid for the use of the trademarks. The most significant factors in determining the
assumed royalty rates include the overall role and importance of the trademarks in the particular industry, the
profitability of the products utilizing the trademarks, and the position of the trademarked products in the given market
segment.
•
In developing discount rates for the valuation of our trademarks, we used the market based weighted average cost of
capital, adjusted for higher relative level of risks associated with doing business in other countries, as applicable, as
well as the higher relative levels of risks associated with intangible assets.
The gross value of all trademarks tested was approximately $255.8 million, including the impaired trademarks. As a result of
the quantitative testing the company recognized $33.4 million of impairment charges primarily associated with several
trademarks within the Residential Kitchen Equipment Group, as well as a few in the Commercial Foodservice Equipment
Group. For further details associated with the company's trademarks impairment testing, see Note 3(f) to the Consolidated
Financial Statements. The fair values of the other trademarks tested with no impairment per the analyses, and exceeded their
carrying values by 10% or more. The company believes the assumptions utilized within the quantitative analyses are reasonable
and consistent with assumptions that would be used by other marketplace participants.
The company continues to monitor global and regional economic market conditions, channel inventory levels, and the
underlying demand for its products to assess the impact on its business and financial performance. If actual results are not
consistent with management's estimate and assumptions, a material impairment charge of our trademarks and trade names could
occur, which could have an adverse effect on the company's financial condition and results of operations.
Convertible Debt
The company issued convertible debt with debt and equity components. The company evaluated the different components and
features of the hybrid instrument and determined whether certain elements were embedded derivative instruments which require
bifurcation. Components of convertible debt instruments that upon conversion may be settled fully in cash or partly in cash
based on a net-share settlement basis are accounted for separately as long-term debt and equity when the conversion feature of
the convertible bonds constitute an embedded equity instrument. When an equity instrument is identified, proceeds from
issuance are allocated between debt and equity by measuring first the liability component and then determining the equity
component as a residual amount. Prior to January 3, 2021, the liability component was measured as the fair value of a similar
nonconvertible debt, which results in the recognition of a debt discount. The debt discount amortizes to interest expense, net
within the Consolidated Statements of Earnings, using the effective interest method based on the expected maturity of the debt.
The equity component is reported in additional paid-in capital within the Consolidated Statement of Changes in Stockholders'
Equity and is not remeasured as long as it continues to meet the conditions for equity classification.
The company allocated transaction costs related to the issuance of convertible debt using the same proportions as the proceeds
from the convertible debt. Transaction costs attributable to the liability component are recorded as a direct deduction from the
related debt liability in the Consolidated Balance Sheets and are amortized to interest expense, net within the Consolidated
Statements of Earnings over the term of the convertible debt using the effective interest rate method. Transaction costs
attributable to the equity component are netted within additional paid-in capital within the Consolidated Statement of
Stockholders' Equity.
Effective January 3, 2021, the company early adopted ASU 2020-06 using the modified retrospective approach. The convertible
debt is now accounted for as a single liability and therefore the company no longer recognized any amortization of debt
discounts as non-cash interest expense.
For additional information regarding the company's convertible debt, see Note 5, Financing Arrangements, in the Notes to the
Consolidated Financial Statements.
Pension Benefits
The company sponsors pension benefits to certain employees. The accounting for these plans depends on assumptions made by
management, which are used by actuaries the company engages to calculate the projected and accumulated obligations and the
annual expense recognized for these plans. These assumptions include expected long-term rate of return on plan assets and
discount rates.
The amount of unrecognized actuarial gains and losses recognized in the current year’s operations is based on amortizing the
unrecognized gains or losses for each plan that exceed the larger of 10% of the projected benefit obligation or the fair value of
40
plan assets, also known as the corridor. The amount of unrecognized gain or loss that exceeds the corridor is amortized over the
average future service of the plan participants or the average life expectancy of inactive plan participants for plans where all or
almost all of the plan participants are inactive. While we believe that our assumptions are appropriate, significant differences in
our actual experience or significant changes in our assumptions may materially affect our pension obligations and our future
expense.
Income taxes
The company provides deferred income tax assets and liabilities based on the estimated future tax effects of differences
between the financial and tax bases of assets and liabilities based on currently enacted tax laws. The company’s deferred and
other tax balances are based on management’s interpretation of the tax regulations and rulings in numerous taxing jurisdictions.
Income tax expense and liabilities recognized by the company also reflect its best estimates and assumptions regarding, among
other things, the level of future taxable income, the effect of the company’s various tax planning strategies and uncertain tax
positions. Future tax authority rulings and changes in tax laws, changes in projected levels of taxable income and future tax
planning strategies could affect the actual effective tax rate and tax balances recorded by the company. The company follows
the provisions under ASC 740-10-25 that provides a recognition threshold and measurement criteria for the financial statement
recognition of a tax benefit taken or expected to be taken in a tax return. Tax benefits are recognized only when it is more likely
than not, based on the technical merits, that the benefits will be sustained on examination. Tax benefits that meet the more-
likely-than-not recognition threshold are measured using a probability weighting of the largest amount of tax benefit that has
greater than 50% likelihood of being realized upon settlement. Whether the more-likely-than-not recognition threshold is met
for a particular tax benefit is a matter of judgment based on the individual facts and circumstances evaluated in light of all
available evidence as of the balance sheet date.
New Accounting Pronouncements
See Note 3(r) to the Consolidated Financial Statements for further information on the new accounting pronouncements.
Certain Risk Factors That May Affect Future Results
An investment in shares of the company's common stock involves risks. The company believes the risks and uncertainties
described in "Item 1A. Risk Factors" and in "Special Note Regarding Forward-Looking Statements" are the material risks it
faces. Additional risks and uncertainties not currently known to the company or that it currently deems immaterial may impair
its business operations. If any of the risks identified in "Item 1A. Risk Factors" actually occurs, the company's business, results
of operations and financial condition could be materially adversely affected, and the trading price of the company's common
stock could decline.
41
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
The company is exposed to certain market risks that exist as part of its ongoing business operations, including fluctuations in
changes in interest rates, foreign currency exchange rates and price volatility for certain commodities. The company does not
hold or issue derivative financial instruments for trading or speculative purposes.
Interest Rate Risk
The company is exposed to market risk related to changes in interest rates. The following table summarizes the maturity of the
company's debt obligations:
Variable Rate
Debt
2025 (1)
$
789,023
2026
1,600,151
2027
828
2028
693
2029 and thereafter
4,372
$ 2,395,067
(1) The current year debt payable includes the maturities of the convertible notes.
The company is exposed to interest rate risk on its floating-rate debt. The company has entered into interest rate swaps to fix the
interest rate applicable to certain of its variable-rate debt. Prior to July 1, 2023, the company amended its Credit Facility and the
existing interest rate swap agreements to transition the interest reference rate from one-month LIBOR to one-month Secured
Overnight Financing Rate ("SOFR"). There were no other changes to the company's Credit Facility or timing of cash flows. The
amendment was entered into because the LIBOR rate historically used was no longer published after June 30, 2023. The
company utilized expedients within ASC 848 to conclude that this amendment should be treated as a non-substantial
modification of the existing contract, resulting in no impact to the company's consolidated financial statements. The company
has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other
comprehensive income. As of December 28, 2024, the fair value of these instruments was an asset of $30.0 million. The change
in fair value of these swap agreements in the first twelve months of 2024 was a loss of $9.6 million, net of taxes. The potential
net loss on fair value for such instruments from a hypothetical 10% adverse change in quoted interest rates would not have a
material impact on the company's financial position, results of operations and cash flows.
The company has Convertible Notes that were issued in August 2020, which carry a fixed annual interest rate of 1.00%. As
such, the company does not have economic interest rate exposure on the Convertible Notes. The fair value of the Convertible
Notes is subject to interest rate risk, market risk and other factors due to its conversion feature. The fair value of the Convertible
Notes is also affected by the price and volatility of the company’s common stock and will generally increase or decrease as the
market price of our common stock changes. The interest and market value changes affect the fair value of the Convertible Notes
but do not impact the company’s financial position, cash flows or results of operations due to the fixed nature of the debt
obligation. Additionally, the company carries the Convertible Notes at face value, less any unamortized discount on the balance
sheet and presents the fair value for disclosure purposes only.
Foreign Exchange Derivative Financial Instruments
The company uses derivative financial instruments, principally foreign currency forward purchase and sale contracts with terms
of less than one year, to hedge its exposure to changes in foreign currency exchange rates. The company’s primary hedging
activities are to mitigate its exposure to changes in exchange rates on intercompany and third-party trade receivables and
payables. The company does not currently enter into derivative financial instruments for speculative purposes. In managing its
foreign currency exposures, the company identifies and aggregates naturally occurring offsetting positions and then hedges
residual balance sheet exposures. The potential loss on fair value for such instruments from a hypothetical 10% adverse change
in quoted foreign exchange rates would not have a material impact on the company's financial position, results of operations
and cash flows.
Derivative financial instruments are recognized on the balance sheet as either an asset or a liability measured at fair value.
Changes in the market value and the related foreign exchange gains and losses are recorded in the statement of earnings.
42
Item 8. Financial Statements and Supplementary Data
Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID:42)
44
Consolidated Balance Sheets
47
Consolidated Statements of Earnings
48
Consolidated Statements of Comprehensive Income
49
Consolidated Statements of Changes in Stockholders’ Equity
50
Consolidated Statements of Cash Flows
51
Notes to Consolidated Financial Statements
52
The following consolidated financial statement schedule is included in response to Item 15
Schedule II - Valuation and Qualifying Accounts and Reserves
87
All other schedules for which provision is made to applicable regulation of the Securities and Exchange Commission are not
required under the related instruction or are inapplicable and, therefore, have been omitted.
43
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of The Middleby Corporation
Opinion on Internal Control over Financial Reporting
We have audited The Middleby Corporation’s internal control over financial reporting as of December 28, 2024, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 Framework), (the COSO criteria). In our opinion, The Middleby Corporation (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on the
COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of GBT GmbH Bakery, MaxMac, Emery Thompson, JC Ford and Gorreri which are included in the 2024 consolidated
financial statements of the Company and constituted 2.5% and 0.0% of total and net assets, respectively, as of December 28,
2024 and 0.6% and (0.1)% of net sales and net earnings, respectively, for the year then ended. Our audit of internal control over
financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of GBT
GmbH Bakery, MaxMac, Emery Thompson, JC Ford and Gorreri.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December 30, 2023, the related
consolidated statements of earnings, comprehensive income, changes in stockholders' equity and cash flows for each of the
three years in the period ended December 28, 2024, and the related notes and financial statement schedule listed in the Index at
Item 8 and our report dated February 26, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 26, 2025
44
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of The Middleby Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of The Middleby Corporation (the Company) as of December
28, 2024, and December 30, 2023, the related consolidated statements of earnings, comprehensive income, changes in
stockholders' equity and cash flows for each of the three years in the period ended December 28, 2024, and the related notes and
financial statement schedule listed in the Index at Item 8 (collectively referred to as the “consolidated financial statements”). In
our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 28, 2024 and December 30, 2023, and the results of its operations and its cash flows for each of the three years in
the period ended December 28, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 28, 2024, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 26, 2025, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
45
Goodwill Impairment Assessment
Description of the
Matter
At December 28, 2024, the Company had goodwill of $2.5 billion on its consolidated balance
sheet. As discussed in Note 3 to the consolidated financial statements, goodwill is assessed for
impairment on an annual basis or more frequently if indicators of potential impairment exist. If
the fair value of the reporting units (for goodwill) is less than its respective carrying value, an
impairment loss is recognized in an amount equal to the difference.
Auditing the Company’s quantitative goodwill impairment assessment is complex because the
estimation of fair values involves subjective management assumptions. These assumptions for the
goodwill assessment include the net sales growth, EBITDA margin and discount rate. These
significant assumptions used in the Company’s valuation model are forward looking and changes
in these assumptions can have a material effect on the determination of fair values.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of the
Company’s controls over its impairment assessment for the Residential Kitchen reporting unit,
including management’s review of the methods and significant assumptions described above.
Our audit procedures to test the annual impairment assessment for the Residential Kitchen
reporting unit included, among others, assessing the assumptions described above, and the
underlying data used to support such assumptions. For example, we compared certain assumptions
to industry, market and economic trends. Where appropriate, we evaluated whether changes to
the Company’s business and other factors would affect the assumption. We also assessed the
historical accuracy of management’s estimates and performed sensitivity analyses. We involved
our valuation specialists to assist with our evaluation of the methodology and auditing certain
significant assumptions included in the fair value estimates.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2012.
Chicago, Illinois
February 26, 2025
46
THE MIDDLEBY CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 2024 AND DECEMBER 30, 2023
(amounts in thousands, except share data)
ASSETS
Dec 28, 2024
Dec 30, 2023
Current assets:
Cash and cash equivalents
$
689,533 $
247,496
Accounts receivable, net of reserve for doubtful accounts of $24,597 and $23,464
643,355
644,576
Inventories, net
841,567
935,867
Prepaid expenses and other
131,566
112,690
Prepaid taxes
24,022
25,230
Total current assets
2,330,043
1,965,859
Property, plant and equipment, net of accumulated depreciation of $377,408 and $339,528
525,965
510,898
Goodwill
2,518,222
2,486,310
Other intangibles, net of amortization of $633,842 and $574,079
1,611,037
1,693,076
Long-term deferred tax assets
6,281
7,945
Pension benefits assets
91,207
38,535
Other assets
200,396
204,069
Total assets
$
7,283,151 $
6,906,692
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt
$
43,949 $
44,822
Accounts payable
208,908
227,080
Accrued expenses
576,465
579,192
Total current liabilities
829,322
851,094
Long-term debt
2,351,118
2,380,373
Long-term deferred tax liability
252,062
216,143
Accrued pension benefits
9,573
12,128
Other non-current liabilities
202,645
197,065
Stockholders' equity:
Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued
—
—
Common stock, $0.01 par value; 64,264,828 and 63,942,340 shares issued in 2024 and
2023, respectively
148
148
Paid-in capital
520,177
479,216
Treasury stock, at cost; 10,574,619 and 10,338,922 shares in 2024 and 2023,
respectively
(940,691)
(906,031)
Retained earnings
4,328,187
3,899,754
Accumulated other comprehensive loss
(269,390)
(223,198)
Total stockholders' equity
3,638,431
3,249,889
Total liabilities and stockholders' equity
$
7,283,151 $
6,906,692
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
47
THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023
AND DECEMBER 31, 2022
(amounts in thousands, except per share data)
2024
2023
2022
Net sales
$ 3,875,162 $ 4,036,605 $ 4,032,853
Cost of sales
2,404,793
2,502,543
2,586,299
Gross profit
1,470,369
1,534,062
1,446,554
Selling, general, and administrative expenses
762,502
806,946
797,234
Restructuring expenses
14,181
14,134
9,716
Impairments
38,637
78,114
—
Gain on sale of plant
(1,139)
—
—
Income from operations
656,188
634,868
639,604
Interest expense and deferred financing amortization, net
92,229
120,348
88,977
Net periodic pension benefit (other than service cost & curtailment)
(14,897)
(9,071)
(42,681)
Other expense, net
1,536
4,213
28,893
Earnings before income taxes
577,320
519,378
564,415
Provision for income taxes
148,887
118,496
127,846
Net earnings
$
428,433 $
400,882 $
436,569
Net earnings per share:
Basic
$
7.97 $
7.48 $
8.07
Diluted
$
7.90 $
7.41 $
7.95
Weighted average number of shares
Basic
53,738
53,577
54,095
Dilutive common stock equivalents
471
509
852
Diluted
54,209
54,086
54,947
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
48
THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023
AND DECEMBER 31, 2022
(amounts in thousands)
2024
2023
2022
Net earnings
$
428,433
$
400,882
$
436,569
Other comprehensive (loss) income:
Foreign currency translation adjustments
(67,765)
59,855
(107,691)
Pension liability adjustment, net of tax
31,179
11,988
127,995
Unrealized (loss) gain on interest rate swaps, net of tax
(9,606)
(16,569)
61,638
Unrealized loss on certain investments, net of tax
—
—
(1,330)
Other comprehensive (loss) income:
$
(46,192) $
55,274
$
80,612
Comprehensive income
$
382,241
$
456,156
$
517,181
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
49
THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023
AND DECEMBER 31, 2022
(amounts in thousands)
Common
Stock
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income/(loss)
Total
Stockholders'
Equity
Balance, January 1, 2022
$
147
$ 357,309
$ (566,399) $ 3,062,303
$
(359,084) $
2,494,276
Net earnings
—
—
—
436,569
—
436,569
Currency translation adjustments
—
—
—
—
(107,691)
(107,691)
Change in unrecognized pension benefit costs, net of tax of
$37,475
—
—
—
—
127,995
127,995
Unrealized gain on interest rate swap, net of tax of $21,337
—
—
—
—
61,638
61,638
Unrealized loss on certain investments, net of tax of $(443)
—
—
—
—
(1,330)
(1,330)
Stock compensation
—
58,368
—
—
—
58,368
Purchase of treasury stock
—
—
(264,777)
—
—
(264,777)
Purchase of capped calls, net of tax of $(2,354)
—
(7,301)
—
—
—
(7,301)
Balance, December 31, 2022
$
147
$ 408,376
$ (831,176) $ 3,498,872
$
(278,472) $
2,797,747
Net earnings
—
—
—
400,882
—
400,882
Currency translation adjustments
—
—
—
—
59,855
59,855
Change in unrecognized pension benefit costs, net of tax of
$5,993
—
—
—
—
11,988
11,988
Unrealized gain on interest rate swap, net of tax of $(5,637)
—
—
—
—
(16,569)
(16,569)
Stock compensation
—
51,047
—
—
—
51,047
Stock issuance
1
19,793
—
—
—
19,794
Purchase of treasury stock
—
—
(74,855)
—
—
(74,855)
Balance, December 30, 2023
$
148
$ 479,216
$ (906,031) $ 3,899,754
$
(223,198) $
3,249,889
Net earnings
—
—
—
428,433
—
428,433
Currency translation adjustments
—
—
—
—
(67,765)
(67,765)
Change in unrecognized pension benefit costs, net of tax of
$9,868
—
—
—
—
31,179
31,179
Unrealized gain on interest rate swap, net of tax of $(3,221)
—
—
—
—
(9,606)
(9,606)
Stock compensation
—
36,151
—
—
—
36,151
Stock issuance
—
4,810
—
—
—
4,810
Purchase of treasury stock
—
—
(34,660)
—
—
(34,660)
Balance, December 28, 2024
$
148
$ 520,177
$ (940,691) $ 4,328,187
$
(269,390) $
3,638,431
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
50
THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023
AND DECEMBER 31, 2022
(amounts in thousands)
2024
2023
2022
Cash flows from operating activities—
Net earnings
$
428,433
$
400,882
$
436,569
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization
127,174
132,604
138,061
Non-cash share-based compensation
36,151
51,047
58,368
Deferred income taxes
35,877
(2,405)
(6,642)
Net periodic pension benefit (other than service costs)
(14,897)
(9,071)
(42,681)
Gain on sale of plant
(1,139)
—
—
Impairments
38,637
78,114
—
Other non-cash items
645
1,529
(12,127)
Changes in assets and liabilities, net of acquisitions
Accounts receivable, net
11,976
(4,624)
(28,392)
Inventories, net
95,407
157,868
(196,313)
Prepaid expenses and other assets
(45,462)
(17,081)
(5,201)
Accounts payable
(21,935)
(49,369)
(47,742)
Accrued expenses and other liabilities
(4,051)
(110,704)
38,652
Net cash provided by operating activities
686,816
628,790
332,552
Cash flows from investing activities—
Net additions to property, plant and equipment
(49,310)
(85,179)
(67,289)
Proceeds from sale of property, plant and equipment
2,507
—
—
Purchase of intangible assets
(80)
(1,805)
(2,233)
Acquisitions, net of cash acquired
(111,652)
(68,758)
(278,797)
Net cash used in investing activities
(158,535)
(155,742)
(348,319)
Cash flows from financing activities—
Proceeds under Credit Facility
—
640,200
1,870,000
Repayments under Credit Facility
(32,813)
(948,496)
(1,555,250)
Premiums paid for capped call
—
—
(9,655)
Net repayments under foreign bank loan
(2,193)
(166)
(24,470)
Payments of deferred purchase price
(3,878)
(7,701)
(7,930)
Repurchase of treasury stock
(34,660)
(74,565)
(264,777)
Other, net
(224)
(211)
(287)
Net cash (used in) provided by financing activities
(73,768)
(390,939)
7,631
Effect of exchange rates on cash and cash equivalents
(12,476)
3,386
(10,225)
Changes in cash and cash equivalents—
Net increase (decrease) in cash and cash equivalents
442,037
85,495
(18,361)
Cash and cash equivalents at beginning of year
247,496
162,001
180,362
Cash and cash equivalents at end of year
$
689,533
$
247,496
$
162,001
Non-cash investing and financing activities:
Stock issuance related to acquisition and purchase of intangible assets
4,810
19,794
—
The accompanying Notes to Consolidated Financial Statements
are an integral part of these consolidated financial statements.
51
THE MIDDLEBY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023
AND DECEMBER 31, 2022
(1)
NATURE OF OPERATIONS
The Middleby Corporation (the "company") is engaged in the design, manufacture and sale of commercial foodservice, food
processing equipment and residential kitchen equipment. The company manufactures and assembles this equipment at forty-
four U.S. and thirty-eight international manufacturing facilities. The company operates in three business segments: 1) the
Commercial Foodservice Equipment Group, 2) the Food Processing Equipment Group and 3) the Residential Kitchen
Equipment Group.
The Commercial Foodservice Equipment Group has a broad portfolio of foodservice equipment, which enable it to serve
virtually any cooking, warming, refrigeration, freezing and beverage application within a commercial kitchen or foodservice
operation. This equipment is used across all types of foodservice operations, including quick-service restaurants, full-service
restaurants, convenience stores, retail outlets, hotels and other institutions. The products offered by this group include conveyor
ovens, combi-ovens, convection ovens, baking ovens, proofing ovens, deck ovens, high-speed cooking ovens, hydrovection
ovens, ranges, fryers, rethermalizers, steam cooking equipment, food warming equipment, catering equipment, heated cabinets,
charbroilers, ventless cooking systems, kitchen ventilation, induction cooking equipment, countertop cooking equipment,
toasters, griddles, charcoal grills, professional mixers, stainless steel fabrication, custom millwork, professional refrigerators,
blast chillers, coldrooms, ice machines, freezers, frozen dessert equipment, soft serve ice cream equipment, coffee and beverage
dispensing equipment, home and professional craft brewing equipment, fry dispensers, bottle filling and canning equipment,
IoT solutions and controls development and manufacturing.
The Food Processing Equipment Group offers a broad portfolio of processing solutions for customers producing pre-cooked
meat products, such as hot dogs, dinner sausages, poultry and lunchmeats and baked goods such as muffins, cookies and bread.
Through its broad line of products, the company is able to deliver a wide array of cooking solutions to service a variety of food
processing requirements demanded by its customers. The company can offer highly integrated solutions that provide a food
processing operation a uniquely integrated solution providing for the highest level of food quality, product consistency, and
reduced operating costs resulting from increased product yields, increased capacity and greater throughput and reduced labor
costs through automation. The products offered by this group include a wide array of cooking and baking solutions, including
batch ovens, baking ovens, proofing ovens, conveyor belt ovens, continuous processing ovens, frying systems and automated
thermal processing systems. The company also provides a comprehensive portfolio of complementary food preparation
equipment such as tumblers, massagers, grinders, slicers, reduction and emulsion systems, mixers, blenders, battering
equipment, breading equipment, seeding equipment, water cutting systems, food presses, food suspension equipment, filling
and depositing solutions, and forming equipment, as well as a variety of automated loading and unloading systems, automated
washing systems, auto-guided vehicles, food safety, food handling, freezing, defrosting and packaging equipment. This
portfolio of equipment can be integrated to provide customers a highly efficient and customized solution.
The Residential Kitchen Equipment Group has a broad portfolio of innovative and professional-style residential kitchen
equipment. The products offered by this group include ranges, cookers, stoves, cooktops, microwaves, ovens, refrigerators,
dishwashers, undercounter refrigeration, wine cellars, ice machines, beer dispensers, ventilation equipment, mixers, rotisseries
and outdoor cooking equipment.
52
(2) ACQUISITIONS AND PURCHASE ACCOUNTING
The following represents summarized information on the company's acquisitions in 2023 and 2024 that were not individually
material.
2023 Acquisitions
During 2023, the company completed various acquisitions that were not individually material. The final allocation of
consideration paid for the 2023 acquisitions is summarized as follows (in thousands):
Preliminary
Opening Balance
Sheet
Measurement
Period
Adjustments
Adjusted Opening
Balance Sheet
Cash
$
3,102
$
—
$
3,102
Current assets
9,964
11
9,975
Property, plant and equipment
21,954
(214)
21,740
Goodwill
38,422
3,278
41,700
Other intangibles
34,337
(722)
33,615
Other assets
—
5
5
Current liabilities
(3,774)
(1,147)
(4,921)
Long-term deferred tax liability
(958)
23
(935)
Other non-current liabilities
(12,099)
(216)
(12,315)
Consideration paid at closing
$
90,948
$
1,018
$
91,966
Contingent consideration
14,743
216
14,959
Net assets acquired and liabilities assumed
$
105,691
$
1,234
$
106,925
The net long-term deferred tax liability amounted to $0.9 million. The net deferred tax liability is comprised of $0.3 million
related to the difference between the book and tax basis of identifiable intangible assets and $0.6 million related to the
difference between the book and tax basis on identifiable tangible asset and liability accounts.
The goodwill and $17.9 million of other intangibles associated with the trade names are subject to the non-amortization
provisions of ASC 350. Other intangibles also include $7.2 million allocated to customer relationships, $7.9 million allocated to
developed technology, and $0.6 million allocated to backlog, which are being amortized over periods of 7 years, 7 to 12 years,
and 9 months, respectively. Goodwill of $18.0 million and other intangibles of $7.8 million are allocated to the Food Processing
Equipment Group for segment reporting purposes. Goodwill of $9.9 million and other intangibles of $14.1 million are allocated
to the Commercial Foodservice Equipment Group for segment reporting purposes. Goodwill of $13.8 million and other
intangibles of $11.7 million are allocated to the Residential Kitchen Equipment Group for segment reporting purposes. Of these
assets, goodwill of $40.0 million and intangibles of $32.2 million are expected to be deductible for tax purposes.
Four purchase agreements include earnout provisions providing for a contingent payment due to the sellers for the achievement
of certain targets. Four earnouts are payable to the extent certain sales and EBITDA targets are met with measurement dates
ending between 2024 and 2026. One earnout is payable upon the achievement of certain product rollout targets specific to the
year of measurement. The contractual obligation associated with the contingent earnout provisions recognized on the
acquisition date amounts to $15.0 million.
53
2024 Acquisitions
During 2024, the company completed various acquisitions that were not individually material. The following estimated fair
values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition date for
the 2024 acquisitions and are summarized as follows (in thousands):
Preliminary
Opening Balance
Sheet
Preliminary
Measurement
Period
Adjustments
Adjusted Opening
Balance Sheet
Cash
$
7,868
$
—
$
7,868
Current assets
41,836
222
42,058
Property, plant and equipment
31,515
(84)
31,431
Goodwill
61,046
(114)
60,932
Other intangibles
32,248
—
32,248
Long-term deferred tax asset
9
—
9
Other assets
266
938
1,204
Current portion of long-term debt
(290)
—
(290)
Current liabilities
(42,304)
(195)
(42,499)
Long-term debt
(369)
—
(369)
Long-term deferred tax liability
(1,132)
—
(1,132)
Other non-current liabilities
(10,763)
(767)
(11,530)
Consideration paid at closing
$
119,930
$
—
$
119,930
Contingent consideration
8,681
—
8,681
Net assets acquired and liabilities assumed
$
128,611
$
—
$
128,611
The net long-term deferred tax liability amounted to $1.1 million. The net deferred tax liability is related to the difference
between the book and tax basis of identifiable intangible assets.
The goodwill and $16.7 million of other intangibles associated with the trade names are subject to the non-amortization
provisions of ASC 350. Other intangibles also include $12.2 million allocated to customer relationships, $1.1 million allocated
to developed technology, and $2.2 million allocated to backlog, which are being amortized over periods of 5 to 7 years, 7 years,
and 3 to 6 months respectively. Goodwill of $46.7 million and other intangibles of $24.0 million are allocated to the Food
Processing Equipment Group for segment reporting purposes. Goodwill of $14.2 million and other intangibles of $8.2 million
are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. Of these assets, goodwill of
$52.6 million and intangibles of $28.0 million are expected to be deductible for tax purposes.
Two purchase agreements include earnout provisions providing for a contingent payment due to the sellers for the achievement
of certain targets. Two earnouts are payable to the extent certain sales and EBITDA targets are met with measurement dates
ending between 2026 and 2027. The contractual obligation associated with the contingent earnout provisions recognized on the
acquisition date amounts to $8.7 million.
The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets
acquired and liabilities assumed, but the company is waiting for additional information necessary to finalize those fair values
for the acquisitions completed during 2024. Certain intangible assets are preliminarily valued using historical information from
the Food Processing Equipment Group and Commercial Foodservice Equipment Group and qualitative assessment of the
businesses at acquisition date. Specifically, the company estimated the fair values of the intangible assets based on the
percentage of purchase price assigned to similar intangible assets in previous acquisitions. Thus, the provisional measurements
of fair values set forth above are subject to change. The company expects to complete the purchase price allocation as soon as
practicable but no later than one year from the acquisition date.
54
Pro Forma Financial Information
In accordance with ASC 805 Business Combinations, the following unaudited pro forma results of operations for the twelve
months ended December 28, 2024 and December 30, 2023, assumes the 2023 and 2024 acquisitions described above were
completed on January 1, 2023 (first day of fiscal year 2023). The following pro forma results include adjustments to reflect
amortization of intangibles associated with the acquisitions and the effects of adjustments made to the carrying value of certain
assets (in thousands, except per share data):
Twelve Months Ended
December 28, 2024
December 30, 2023
Net sales
$
3,958,724
$
4,140,633
Net earnings
435,145
390,254
Net earnings per share:
Basic
$
8.10
$
7.28
Diluted
$
8.03
$
7.22
The historical consolidated financial information of the company and the acquisitions have been adjusted in the pro forma
information to give effect to events that are (1) directly attributable to the transactions, (2) factually supportable and (3)
expected to have a continuing impact on the combined results. Pro forma data may not be indicative of the results that would
have been obtained had these acquisitions occurred at the beginning of the periods presented, nor is it intended to be a
projection of future results. Additionally, the pro forma financial information does not reflect the costs which the company has
incurred or may incur to integrate the acquired businesses.
(3)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of Presentation
The consolidated financial statements include the accounts of the company and its wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation. The company's consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States. The
preparation of these financial statements requires the company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses as well as related disclosures. Significant items that are subject to such
estimates and judgments include allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and
intangible assets, warranty reserves, insurance reserves, income tax reserves and post-retirement obligations. On an ongoing
basis, the company evaluates its estimates and assumptions based on historical experience and various other factors that are
believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions
or conditions.
The company's fiscal year ends on the Saturday nearest December 31. Fiscal years 2024, 2023, and 2022 ended on
December 28, 2024, December 30, 2023 and December 31, 2022, respectively, with each year including 52 weeks.
(b)
Cash and Cash Equivalents
The company considers all short-term investments with original maturities of three months or less when acquired to be cash
equivalents. The company’s policy is to invest its excess cash in interest-bearing deposits with major banks that are subject to
minimal credit and market risk.
(c)
Accounts Receivable
Accounts receivable, as shown in the consolidated balance sheets, were net of allowances for doubtful accounts of $24.6
million and $23.5 million at December 28, 2024 and December 30, 2023, respectively. At December 28, 2024, all accounts
receivable were expected to be collected within one year.
55
(d)
Inventories
Inventories are composed of material, labor and overhead and are stated at the lower of cost or net realizable value. Costs for
inventory have been determined using the first-in, first-out ("FIFO") method. The company estimates reserves for inventory
obsolescence and shrinkage based on its judgment of future realization. Inventories at December 28, 2024 and December 30,
2023 are as follows (in thousands):
2024
2023
Raw materials and parts
$
453,273 $
495,488
Work-in-process
76,601
80,102
Finished goods
311,693
360,277
$
841,567 $
935,867
(e)
Property, Plant and Equipment
Property, plant and equipment are carried at cost as follows (in thousands):
2024
2023
Land
$
74,163 $
73,060
Building and improvements
372,845
346,527
Furniture and fixtures
69,556
69,438
Machinery and equipment
386,809
361,401
903,373
850,426
Less accumulated depreciation
(377,408)
(339,528)
$
525,965 $
510,898
Property, plant and equipment are depreciated or amortized on a straight-line basis over their useful lives based on
management's estimates of the period over which the assets will be utilized to benefit the operations of the company. The useful
lives are estimated based on historical experience with similar assets, taking into account anticipated technological or other
changes. The company periodically reviews these lives relative to physical factors, economic factors and industry trends. If
there are changes in the planned use of property and equipment or if technological changes were to occur more rapidly than
anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased
depreciation and amortization expense in future periods.
The following is a summary of the estimated useful lives:
Description
Life
Building and improvements
20 to 40 years
Furniture and fixtures
3 to 7 years
Machinery and equipment
3 to 10 years
Depreciation expense amounted to $55.6 million, $50.4 million and $44.2 million in fiscal 2024, 2023 and 2022, respectively.
Expenditures which significantly extend useful lives are capitalized. Maintenance and repairs are charged to expense as
incurred. Asset impairments are recorded whenever events or changes in circumstances indicate that the recorded value of an
asset is greater than the sum of its expected future undiscounted cash flows. Asset impairments are recorded at the amount by
which the recorded value of an asset exceeds its fair value.
56
(f)
Goodwill and Other Intangibles
The company’s business acquisitions result in the recognition of goodwill and other intangible assets, which are a significant
portion of the company’s total assets. Goodwill represents the excess of acquisition costs over the fair value of the net tangible
assets and identifiable intangible assets acquired in a business combination. Identifiable intangible assets are recognized
separately from goodwill and include trademarks and trade names, technology, customer relationships and other specifically
identifiable assets. Trademarks and trade names are deemed to be indefinite-lived. Goodwill and indefinite-lived intangible
assets are not amortized but are subject to impairment testing.
The company performs the annual impairment assessment for goodwill and indefinite-lived intangible assets as of first day of
the fourth quarter of the fiscal year and more frequently if indicators of impairment exist. The goodwill impairment test is
performed at the reporting unit level. The company initially performs a qualitative analysis to determine if it is more likely than
not that the goodwill balance or indefinite-life intangible asset is impaired. In conducting a qualitative assessment, the company
analyzes a variety of events or factors that may influence the fair value of the reporting unit or indefinite-life intangible,
including, but not limited to: macroeconomic conditions, industry and market considerations, cost factors, overall financial
performance, share price and other relevant factors.
If an indicator of impairment is determined from the qualitative analysis, then the company will perform a quantitative analysis.
The fair value of each reporting unit is compared to its carrying value. If the fair value of the reporting unit is less than its
carrying value, the resulting difference will be a charge to impairment of goodwill in the Consolidated Statements of Earnings
in the period in which the determination is made. Fair value is determined using an income approach using a discounted cash
flow model.
The company performed a qualitative assessment as of September 29, 2024 over all three reporting units. As a result of the
financial performance for the Residential Kitchen reporting unit, the company completed a quantitative analysis. The primary
indicator of impairment was market conditions resulting in lower than expected revenue performance in the current year and
forecasted revenues for future periods. The fair value of the reporting unit exceeded its carrying unit by more than 8% and no
impairment of goodwill was recognized. The company believes the assumptions utilized within the quantitative analysis are
reasonable and consistent with assumptions that would be used by other marketplace participants.
Based on the qualitative assessment for all other reporting units it was determined there was no impairment of goodwill and
there are no accumulated impairment losses.
Goodwill is allocated to the business segments as follows (in thousands):
Commercial
Foodservice
Food
Processing
Residential
Kitchen
Total
Balance as of December 31, 2022
$
1,309,776 $ 350,303 $ 751,755 $ 2,411,834
Goodwill acquired during the year
9,640
17,922
13,586
41,148
Measurement period adjustments to goodwill acquired in prior year
4,825
1,540
—
6,365
Exchange effect
4,815
5,452
16,696
26,963
Balance as of December 30, 2023
$
1,329,056 $ 375,217 $ 782,037 $ 2,486,310
Goodwill acquired during the year
14,187
46,745
—
60,932
Measurement period adjustments to goodwill acquired in prior year
271
57
224
552
Exchange effect
(11,683)
(9,604)
(8,285)
(29,572)
Balance as of December 28, 2024
$
1,331,831 $ 412,415 $ 773,976 $ 2,518,222
57
Intangible assets consist of the following (in thousands):
December 28, 2024
December 30, 2023
Estimated
Weighted
Avg
Remaining
Life
Gross
Carrying
Amount
Accumulated
Amortization
Estimated
Weighted
Avg
Remaining
Life
Gross
Carrying
Amount
Accumulated
Amortization
Amortized intangible assets:
Customer lists
6.4
$ 850,540 $
(581,301)
7.0
$ 845,326 $
(529,533)
Backlog
0.3
2,192
(804)
0.0
—
—
Developed technology
7.4
98,921
(51,737)
8.3
98,593
(44,546)
$ 951,653 $
(633,842)
$ 943,919 $
(574,079)
Indefinite-lived assets:
Trademarks and tradenames
$ 1,293,226
$ 1,323,236
The company completed its annual impairment assessment for indefinite-lived intangible assets as of September 29, 2024. We
identified indicators of impairment with certain trademarks within each of its reporting units. The primary indicator of
impairment was market conditions resulting in lower than expected revenue performance in the current year and forecasted
revenues for future periods.
Based on the results of the quantitative assessments, the company recorded impairment charges of $33.4 million associated with
several trademarks, of which $28.2 million was associated with the Residential Kitchen Equipment Group and $5.2 million with
the Commercial Foodservice Equipment Group. The gross value of all trademarks tested was approximately $255.8 million,
including the impaired trademarks. The fair values of the other trademarks tested with no impairment, per the analyses,
exceeded their carrying values by 10% or more.
The primary trademark impaired based on the quantitative assessments was within the Residential Kitchen Equipment Group.
The fair value of the trademark was estimated to be $83.6 million as compared to the carrying value of $100.4 million and
resulted in a $16.8 million indefinite-lived intangible asset impairment charge. The diminution in fair value for the trademark
was due to European macroeconomic conditions such as high interest rates, challenging housing market conditions and higher
carrying costs of inventory levels in the channel. This led to lower than expected revenue in the current year and corresponding
reductions of future revenue due to expectations for recovery in demand. The company estimated the fair value of the trademark
using a relief from royalty method under the income approach. In performing the quantitative analyses on this trademark,
significant assumptions include revenue growth rates, assumed royalty rates and the discount rate. The company believes the
assumptions utilized within the quantitative analysis are reasonable and consistent with assumptions that would be used by
other marketplace participants.
For the primary trademark impaired, a 10.0% reduction in revenues would result in an impairment charge of approximately
$7.6 million. A 50 basis point reduction of the royalty rates would result in an impairment charge of approximately $5.8
million. A 50 basis point increase in the discount rates would result in an impairment charge of approximately $5.5 million.
The company performed a qualitative assessment as of September 29, 2024 for all other trademarks and trade names and
determined it is more likely than not that the fair value of its other indefinite-life intangible assets are greater than the carrying
amounts.
The company elected to perform a qualitative assessment on the other indefinite-life intangible assets. We identified indicators
of impairment resulting in an impairment charge of approximately $5.2 million associated with the decline in recoverable value
of an equity method investment. There were no other events that indicated that the fair value was less than the carrying value
that would require a quantitative impairment assessment for other indefinite-life intangible assets.
The estimates of future cash flows used in determining the fair value of goodwill and indefinite-lived intangible assets involve
significant management judgment and are based upon assumptions about expected future operating performance, economic
conditions, market conditions and cost of capital. Inherent in estimating the future cash flows are uncertainties beyond our
control, such as changes in capital markets. The company continues to monitor global and regional economic market
conditions, channel inventory levels, and the underlying demand for its products to assess the impact on its business and
financial performance. The actual cash flows could differ materially from management's estimates due to changes in business
conditions, operating performance and economic conditions.
58
Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment whenever events or
changes in circumstances indicate that the recorded value of an asset is greater than the sum of its expected future undiscounted
cash flows.
The aggregate intangible amortization expense was $64.4 million, $75.0 million and $86.3 million in 2024, 2023 and 2022,
respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):
2025
$
60,165
2026
55,638
2027
47,122
2028
40,829
2029
35,856
Thereafter
78,201
$
317,811
(g)
Accrued Expenses
Accrued expenses consist of the following at December 28, 2024 and December 30, 2023, respectively (in thousands):
2024
2023
Contract liabilities
$
120,503 $
118,681
Accrued payroll and related expenses
107,061
121,514
Accrued warranty
98,306
89,039
Accrued customer rebates
54,558
59,267
Accrued short-term leases
27,938
26,417
Accrued contingent consideration
25,748
17,791
Accrued sales and other tax
20,626
24,568
Accrued agent commission
16,730
16,956
Accrued professional fees
13,973
18,461
Accrued product liability and workers compensation
10,386
11,169
Other accrued expenses
80,636
75,329
$
576,465 $
579,192
(h)
Litigation Matters
From time to time, the company is subject to proceedings, lawsuits and other claims related to products, suppliers, employees,
customers and competitors. The company maintains insurance to partially cover product liability, workers compensation,
property and casualty, and general liability matters. The company is required to assess the likelihood of any adverse judgments
or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required,
if any, for these contingencies is made after assessment of each matter and the related insurance coverage. The required accrual
may change in the future due to new developments or changes in approach such as a change in settlement strategy in dealing
with these matters. The company does not believe that any such matter will have a material adverse effect on its financial
condition, results of operations or cash flows of the company.
59
(i)
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the components of accumulated other comprehensive income (loss) as reported in the
consolidated balance sheets (in thousands):
2024
2023
Unrecognized pension benefit costs, net of tax of $13,866 and $3,998
$
(78,534) $
(109,713)
Unrealized gain on interest rate swap, net of tax of $7,978 and $11,198
22,399
32,005
Currency translation adjustments
(213,255)
(145,490)
$
(269,390) $
(223,198)
Changes in accumulated other comprehensive income (loss) (1) were as follows (in thousands):
Currency
Translation
Adjustment
Pension
Benefit
Costs
Unrealized
Gain/(Loss)
Interest Rate
Swap
Total
Balance as of December 31, 2022
$ (205,345) $ (121,701) $
48,574 $ (278,472)
Other comprehensive income before reclassification
$
59,855 $
11,392 $
15,652 $
86,899
Amounts reclassified from accumulated other comprehensive
income
$
— $
596 $
(32,221) $
(31,625)
Net current-period other comprehensive income
$
59,855 $
11,988 $
(16,569) $
55,274
Balance as of December 30, 2023
$ (145,490) $ (109,713) $
32,005 $ (223,198)
Other comprehensive income before reclassification
(67,765)
28,585
17,598
(21,582)
Amounts reclassified from accumulated other comprehensive
income
—
2,594
(27,204)
(24,610)
Net current-period other comprehensive income
$
(67,765) $
31,179 $
(9,606) $
(46,192)
Balance as of December 28, 2024
$ (213,255) $
(78,534) $
22,399 $ (269,390)
(1) As of December 28, 2024, pension and unrealized gain on interest rate swap amounts, net of tax, were $13.9 million and
$8.0 million, respectively. During the twelve months ended December 28, 2024, the adjustments to pension and unrealized gain
on interest rate swap amounts, net of tax, were $9.9 million and $(3.2) million, respectively
60
(j)
Fair Value Measures
ASC 820 Fair Value Measurements and Disclosures defines fair value as the price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs
used in measuring fair value into the following levels:
Level 1 – Quoted prices in active markets for identical assets or liabilities
Level 2 – Inputs, other than quoted prices in active markets, which are observable either directly or indirectly
Level 3 – Unobservable inputs based on our own assumptions
The company’s financial assets and liabilities that are measured at fair value and are categorized using the fair value hierarchy
are as follows (in thousands):
Fair Value
Level 1
Fair Value
Level 2
Fair Value
Level 3
Total
As of December 28, 2024
Financial Assets:
Interest rate swaps
$
—
$
29,952
$
—
$
29,952
Financial Liabilities:
Contingent consideration
$
—
$
—
$
53,228
$
53,228
Foreign exchange derivative contracts
$
—
$
1,400
$
—
$
1,400
As of December 30, 2023
Financial Assets:
Interest rate swaps
$
—
$
42,779
$
—
$
42,779
Foreign exchange derivative contracts
$
—
$
29
$
—
$
29
Financial Liabilities:
Contingent consideration
$
—
$
—
$
51,538
$
51,538
The contingent consideration, as of December 28, 2024 and December 30, 2023, relates to the earnout provisions recorded in
conjunction with various purchase agreements.
The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and
earnings, as defined in the respective purchase agreements. On a quarterly basis, the company assesses the projected results for
each of the acquisitions in comparison to the earnout targets and adjusts the liability accordingly. Discount rates for valuing
contingent consideration are determined based on the company rates and specific acquisition risk considerations. Changes in
fair value associated with the earnout provisions are recognized in Selling, general and administrative expenses within the
Consolidated Statements of Earnings.
The following table represents changes in the fair value of the contingent consideration liabilities for the fiscal years 2024 and
2023:
December 28, 2024
December 30, 2023
Beginning balance
$
51,538
$
47,242
Payments of contingent consideration
(4,141)
(6,871)
New contingent consideration
8,681
15,534
Changes in fair value
(2,850)
(4,367)
Ending balance
$
53,228
$
51,538
61
(k)
Foreign Currency
The income statements of the company’s foreign operations are translated at the monthly average rates. Assets and liabilities of
the company’s foreign operations are translated at exchange rates at the balance sheet date. These translation adjustments are
not included in determining net income for the period but are disclosed and accumulated in a separate component of
stockholders’ equity. Exchange gains and losses on foreign currency transactions are included in determining net income for the
period in which they occur. These transactions amounted to a loss of $1.3 million, $8.7 million and $28.1 million in 2024, 2023
and 2022, respectively, and are included in other expense on the statements of earnings.
(l)
Shipping and Handling Costs
Fees billed to the customer for shipping and handling are classified as a component of net revenues. Shipping and handling
costs are included in cost of products sold.
(m)
Warranty Costs
In the normal course of business, the company issues product warranties for specific product lines and provides for the
estimated future warranty cost in the period in which the sale is recorded. The estimate of warranty cost is based on contract
terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Because warranty
estimates are forecasts that are based on the best available information, claims costs may differ from amounts provided.
Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.
A rollforward of the warranty reserve for the fiscal years 2024 and 2023 is as follows (in thousands):
2024
2023
Beginning balance
$
89,039 $
82,096
Warranty reserve related to acquisitions
420
595
Warranty expense
100,236
89,122
Warranty claims paid
(91,389)
(82,774)
Ending balance
$
98,306 $
89,039
(n)
Research and Development Costs
Research and development costs, included in cost of sales in the consolidated statements of earnings, are charged to expense
when incurred. These costs were $57.7 million, $53.1 million and $48.9 million in fiscal 2024, 2023 and 2022, respectively.
(o)
Non-Cash Share-Based Compensation
The company's 2021 Stock Incentive Plan (the "2021 Plan"), allows for the granting of stock options, stock appreciation rights,
restricted stock and restricted stock units, performance stock, phantom units and other equity-based awards. The company
estimates the fair value of restricted stock grants, restricted stock units and performance stock units at the time of grant and
recognizes compensation costs over the vesting period of the grants. The expense, net of forfeitures, is recognized using the
straight-line method. Non-cash share-based compensation expense is only recognized for those grants expected to vest. See
Note 6, "Common and Preferred Stock," for further information on the company's share-based incentive plans.
62
(p)
Earnings Per Share
“Basic earnings per share” is calculated based upon the weighted average number of common shares actually outstanding, and
“diluted earnings per share” is calculated based upon the weighted average number of common shares outstanding and other
dilutive securities.
The company’s potentially dilutive securities amounted to 471,000, 509,000 and 852,000 for fiscal 2024, 2023 and 2022,
respectively. The company's potentially dilutive securities consist of shares issuable on vesting of restricted stock units
computed using the treasury method and amounted to approximately 53,000, 67,000 and 73,000 for fiscal 2024, 2023 and 2022,
respectively. During fiscal 2024, 2023 and 2022, the average market price of the company's common stock exceeded the
exercise price of the Convertible Notes (as defined below) resulting in approximately 418,000, 442,000 and 779,000 diluted
common stock equivalents to be included in the diluted net earnings per share, respectively. There have been no material
conversions to date. See Note 5, Financing Arrangements, in these Notes to the Consolidated Financial Statements for further
details on the Convertible Notes. There were no anti-dilutive equity awards excluded from common stock equivalents for 2024,
2023 and 2022.
(q)
Consolidated Statements of Cash Flows
Cash paid for interest was $97.7 million, $119.2 million and $77.2 million in fiscal 2024, 2023 and 2022, respectively. Cash
payments totaling $116.9 million, $139.7 million and $114.0 million were made for income taxes during fiscal 2024, 2023 and
2022, respectively.
(r)
New Accounting Pronouncements
Accounting Pronouncements - Recently Adopted
In March 2023, the FASB issued Accounting Standards Update ASU 2023-01, Leases (Topic 842): Common Control
Arrangements. This ASU clarified the accounting for leasehold improvements for leases under common control. The guidance
is effective for the company beginning on January 1, 2024. The company adopted this standard in the first quarter of 2024 and it
did not have a material impact on its Consolidated Financial Statements and disclosures.
In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable
segments, primarily through enhanced disclosures about significant segment expenses. The company adopted this standard
effective January 1, 2024 using a retrospective method. For further information, refer to the Segments section in Note 10,
"Segment Information."
Accounting Pronouncements - To be adopted
In December 2023, the FASB issued Accounting Standard Update ASU No. 2023-09 Income Taxes (Topic 740): Improvements
to Income Tax Disclosures, which expands the disclosures required in an entity’s income tax rate reconciliation table. This ASU
requires consistent categories and greater disaggregation of information presented in the effective tax rate reconciliation and
requires disclosure of income taxes paid both domestic and foreign jurisdictions. The guidance is effective for the company
beginning on January 1, 2025 and is required to be applied prospectively, with retrospective application to prior periods
allowed. Early adoption is permitted. The company is currently evaluating the impact the adoption of this guidance will have on
its Consolidated Financial Statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures: Disaggregation of Income Statement Expenses, which requires disclosure of disaggregated
information about specific categories underlying certain income statement expense line items in the footnotes to the financial
statements for both annual and interim periods. This ASU is effective for fiscal years beginning after December 15, 2026, and
interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The company is currently evaluating
the impact of the adoption of this standard.
63
(4)
REVENUE RECOGNITION
Revenue is recognized when the control of the promised goods or services are transferred to our customers, in an amount that
reflects the consideration that we expect to receive in exchange for those goods or services.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and represents the unit
of account. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when,
or as, the performance obligation is satisfied. The company’s contracts can have multiple performance obligations or just a
single performance obligation.
For contracts with multiple performance obligations, the contracts transaction price is allocated to each performance obligation
using the company’s best estimate of the standalone selling price of each distinct good or service in the contract. As the
company’s standard payment terms are less than one year, the company does not assess whether a contract has a significant
financing component. The company treats shipping and handling activities performed after the customer obtains control of the
good as a contract fulfillment activity. Sales, use and value added taxes assessed by governmental authorities are excluded from
the measurement of the transaction price within the company’s contracts with its customers. The company generally expenses
sales commissions when incurred because the amortization period would have been less than one year. These costs are recorded
within selling, general and administrative expenses.
Within the Commercial Foodservice Equipment and Residential Foodservice Equipment Groups, the estimated standalone
selling price of equipment is based on observable prices. Within the Food Processing Equipment Group, the company estimates
the standalone selling price based on expected cost to manufacture the good or complete the service plus an appropriate profit
margin.
Control may pass to the customer over time or at a point in time. In general, the Commercial Foodservice Equipment and
Residential Foodservice Equipment Groups recognize revenue at the point in time control transfers to their customers based on
contractual shipping terms. Revenue from equipment sold under our long-term contracts within the Food Processing Equipment
group is recognized over time as the equipment is manufactured and assembled. Installation services provided in connection
with the delivery of the equipment are also generally recognized as those services are rendered. Over time transfer of control is
measured using an appropriate input measure (e.g., costs incurred or direct labor hours incurred in relation to total estimate).
These measures include forecasts based on the best information available and therefore reflect the company's judgment to
faithfully depict the transfer of the goods.
Contract Estimates
Accounting for long-term contracts within the Food Processing Equipment group involves the use of various techniques to
estimate total contract revenue and costs. For the company’s long-term contracts, estimated profit for the equipment
performance obligations is recognized as the equipment is manufactured and assembled. Profit on the equipment performance
obligations is estimated as the difference between the total estimated revenue and expected costs to complete a contract.
Contract cost estimates are based on labor productivity and availability, the complexity of the work to be performed, the cost
and availability of materials and labor, and the performance of subcontractors. The company does not disclose information
about remaining performance obligations that have original expected durations of one year or less.
Contracts within the Commercial Foodservice and Residential Foodservice Equipment groups may contain variable
consideration in the form of volume rebate programs. The company’s estimate of variable consideration is based on its
experience with similarly situated customers using the portfolio approach.
64
Disaggregation of Revenue
We disaggregate our net sales by reportable operating segment and geographical location as we believe it best depicts how the
nature, timing and uncertainty of our net sales and cash flows are affected by economic factors. The following table summarizes
our net sales by reportable operating segment and geographical location (in thousands):
Commercial
Foodservice
Food
Processing
Residential
Kitchen
Total
Twelve Months Ended December 28, 2024
United States and Canada
$ 1,710,361 $
443,404 $
461,107 $ 2,614,872
Asia
215,258
28,985
18,462
262,705
Europe and Middle East
396,837
194,102
235,974
826,913
Latin America
96,780
64,512
9,380
170,672
Total
$ 2,419,236 $
731,003 $
724,923 $ 3,875,162
Twelve Months Ended December 30, 2023
United States and Canada
$ 1,828,416 $
479,312 $
513,333 $ 2,821,061
Asia
233,039
40,208
12,611
285,858
Europe and Middle East
369,823
145,293
258,201
773,317
Latin America
90,193
55,805
10,371
156,369
Total
$ 2,521,471 $
720,618 $
794,516 $ 4,036,605
Twelve Months Ended December 31, 2022
United States and Canada
$ 1,750,986 $
426,124 $
701,909 $ 2,879,019
Asia
212,182
20,306
32,121
264,609
Europe and Middle East
364,120
100,239
303,840
768,199
Latin America
67,474
43,300
10,252
121,026
Total
$ 2,394,762 $
589,969 $ 1,048,122 $ 4,032,853
Contract Balances
Contract assets primarily relate to the company's right to consideration for work completed but not billed at the reporting date
and are recorded in prepaid expenses and other in the Consolidated Balance Sheet. Contract assets are transferred to receivables
when the right to consideration becomes unconditional.
Contract liabilities relate to advance consideration received from customers for which revenue has not been recognized. Current
contract liabilities are recorded in accrued expenses in the Consolidated Balance Sheet. Non-current contract liabilities are
recorded in other non-current liabilities in the Consolidated Balance Sheet. Contract liabilities are reduced when the associated
revenue from the contract is recognized.
The following table provides information about contract assets and contract liabilities from contracts with customers (in
thousands):
December 28, 2024
December 30, 2023
Contract assets
$
68,025 $
47,072
Contract liabilities
$
120,503 $
118,681
Non-current contract liabilities
$
19,930 $
15,721
During the twelve months period ended December 28, 2024, the company reclassified $43.3 million to accounts receivable
which was included in the contract asset balance at the beginning of the period. During the twelve months period ended
December 28, 2024, the company recognized revenue of $89.9 million which was included in the contract liability balance at
65
the beginning of the period. Additions to contract liabilities representing amounts billed to clients in excess of revenue
recognized to date were $72.5 million during the twelve months period ended December 28, 2024. Additions to contract
liabilities include $27.3 million related to companies acquired during the twelve months period ended December 28, 2024.
Substantially all of the company's outstanding performance obligations will be satisfied within 12 to 36 months. There were no
contract asset impairments during twelve months period ended December 28, 2024.
(5)
FINANCING ARRANGEMENTS
2024
2023
(in thousands)
Senior secured revolving credit line
$
— $
—
Term loan facility
928,542
945,913
Delayed draw term loan facility
712,500
726,563
Convertible senior notes
745,074
741,501
Foreign loans
8,489
10,531
Other debt arrangement
462
687
Total debt
2,395,067
2,425,195
Less: Current maturities of long-term debt
43,949
44,822
Long-term debt
$
2,351,118 $
2,380,373
Credit Facility
On October 21, 2021, the company entered into an amended and restated five-year, $4.5 billion multi-currency senior secured
credit agreement (the "Credit Facility") that amends and restates the company's pre-existing $3.1 billion credit facility which
had an original maturity of January 31, 2025. The Credit Facility consists of (i) a $1 billion term loan facility, (ii) a $750
million delayed draw term loan facility, and (iii) a $2.75 billion multi-currency revolving credit facility, with the potential under
certain circumstances, to increase the amount of the credit facility by the greater of $625 million and 100% of consolidated
EBITDA for the most recently ended period of consecutive fiscal quarters (plus additional amounts, subject to compliance with
a senior secured net leverage ratio), either by increasing the revolving commitment or by adding one or more revolver or term
loan tranches. The Credit Facility matures on October 21, 2026, with the potential to extend the maturity date in one-year
increments with the consent of the extending lenders. The term facility will amortize in equal quarterly installments due on the
last day of each fiscal quarter, commencing with the first full fiscal quarter after October 21, 2021, in an aggregate amount
equal to 2.50% of the original aggregate principal amount of the term loan facility, with the balance, plus any accrued interest,
due and payable on October 21, 2026. The delayed draw term loan facility is available for borrowing within one year and will
amortize in quarterly installments due on the last day of each fiscal quarter, commencing with the first full fiscal quarter after
each delayed draw term loan borrowing in an amount equal to 0.625% of the original aggregate principal amount of such
borrowing, with the balance, plus any accrued interest, due and payable on October 21, 2026. Fees associated with the
amendment of the term loan facilities are recorded as a direct deduction from the related debt liability in the Consolidated
Balance Sheets and amortized to interest expense over the term of the Credit Facility.
On August 11, 2022, the company borrowed $750.0 million against the delayed draw term facility as provided under the Credit
Agreement. The funds were used to reduce outstanding borrowings under the revolver. The delayed draw term loan amortizes
in quarterly installments due on the last day of each fiscal quarter, and commenced on December 31, 2022, in an amount equal
to 0.625% of the principal drawn, with the balance, plus any accrued interest payable by October 21, 2026.
As of December 28, 2024, the company had $1.6 billion of borrowings outstanding under its credit facility (the "Credit
Facility"), including $931.3 million outstanding under the term loan ($928.5 million, net of unamortized issuance fees) and
$712.5 million outstanding under the delayed draw term loan. The company also had $4.3 million in outstanding letters of
credit as of December 28, 2024, which reduces the borrowing availability under the Credit Facility. Remaining borrowing
capacity under this facility was $2.7 billion at December 28, 2024.
66
At December 28, 2024, borrowings under the Credit Facility accrued interest at a rate of 1.375% above the daily simple or term
Secured Overnight Financing Rate (“SOFR”) per annum or 0.375% above the highest of the prime rate, the federal funds rate
plus 0.50% and one month Term SOFR plus 1.00%. The interest rates on borrowings under the Credit Facility may be adjusted
quarterly based on the company’s Funded Debt less Unrestricted Cash to Pro Forma EBITDA (the “Leverage Ratio”) on a
rolling four-quarter basis. Additionally, a commitment fee based upon the Leverage Ratio is charged on the unused portion of
the commitments under the Credit Facility. As of December 28, 2024, borrowings under the Credit Facility accrued interest at a
minimum of 1.375% above SOFR and the variable unused commitment fee will be at a minimum of 0.20%. Borrowings under
the Credit Facility accrue interest at a minimum of 1.375% above the daily simple SOFR or term SOFR for the applicable
interest period (each of which includes a spread adjustment of 0.10%). The average interest rate per annum, inclusive of
hedging instruments, on the debt under the Credit Facility was equal to 4.75% at the end of the period and the variable
commitment fee was equal to 0.20% per annum as of December 28, 2024.
The term loan and delayed draw term loan facilities had an average interest rate per annum, inclusive of hedging instruments, of
4.75% as of December 28, 2024.
In addition, the company has international credit facilities to fund working capital needs outside the United States. At
December 28, 2024, these foreign credit facilities amounted to $8.5 million in U.S. Dollars with a weighted average per annum
interest rate of approximately 2.42%.
The company’s debt is reflected on the balance sheet at cost. The fair values of the Credit Facility, term debt and foreign and
other debt is based on the amount of future cash flows associated with each instrument discounted using the company's
incremental borrowing rate. The company believes its interest rate margins on its existing debt are consistent with current
market conditions and therefore the carrying value of debt reflects the fair value. The interest rate margin is based on the
company's Leverage Ratio. The carrying value and estimated aggregate fair value, a level 2 measurement, based primarily on
market prices, of debt excluding the Convertible Notes is as follows (in thousands):
Dec 28, 2024
Dec 30, 2023
Carrying Value
Fair Value
Carrying Value
Fair Value
Total debt excluding convertible senior notes
$
1,649,994 $
1,652,702 $
1,683,694 $
1,687,781
The company uses floating-to-fixed interest rate swap agreements to hedge variable interest rate risk associated with the Credit
Facility. At December 28, 2024, the company had outstanding floating-to-fixed interest rate swaps totaling $225.0 million
notional amount carrying an average interest rate of 2.59% maturing in less than 12 months and $470.0 million notional amount
carrying an average interest rate of 1.22% that mature in more than 12 months but less than 38 months.
The terms of the Credit Facility, as amended, limit the ability of the company and its subsidiaries to, with certain exceptions:
incur indebtedness; grant liens; engage in certain mergers, consolidations, acquisitions and dispositions; make restricted
payments; enter into certain transactions with affiliates; and requires, among other things, the company to satisfy certain
financial covenants: (i) a minimum Interest Coverage Ratio (as defined in the Credit Facility) of 3.00 to 1.00 , (ii) a maximum
Secured Leverage Ratio (as defined in the Credit Facility) of Funded Debt less Unrestricted Cash to Pro Forma EBITDA (each
as defined in the Credit Facility) of 3.75 to 1.00, which may be adjusted to 4.25 to 1.00 for a four consecutive fiscal quarter
period in connection with certain qualified acquisitions, subject to the terms and conditions contained in the Credit Facility. The
Credit Facility is secured by substantially all of the assets of Middleby Marshall, the company and the company's domestic
subsidiaries and is unconditionally guaranteed by, subject to certain exceptions, the company and certain of the company's
direct and indirect material foreign and domestic subsidiaries. The Credit Facility contains certain customary events of default,
including, but not limited to, the failure to make required payments; bankruptcy and other insolvency events; the failure to
perform certain covenants; the material breach of a representation or warranty; non-payment of certain other indebtedness; the
entry of undischarged judgments against the company or any subsidiary for the payment of material uninsured amounts; the
invalidity of the company guarantee or any subsidiary guaranty; and a change of control of the company. At December 28,
2024, the company was in compliance with all covenants pursuant to its borrowing agreements.
67
Convertible Notes
The following table summarizes the outstanding principal amount and carrying value of the Convertible Notes:
December 28, 2024
December 30, 2023
(in thousands)
Principal amounts:
Principal
$
747,499 $
747,499
Unamortized issuance costs
(2,425)
(5,998)
Net carrying amount
$
745,074 $
741,501
The following table summarizes total interest expense recognized related to the Convertible Notes:
Twelve Months Ended
Dec 28, 2024
Dec 30, 2023
Dec 31, 2022
Contractual interest expense
$
7,433 $
7,454 $
7,475
Interest cost related to amortization of debt issuance costs
3,573
3,583
3,587
Total interest expense
$
11,006 $
11,037 $
11,062
On August 21, 2020, the company issued $747.5 million aggregate principal amount of 1.00% Convertible Senior Notes due
2025 in a private offering pursuant to an indenture, dated August 21, 2020 (the "Indenture"), between the company and U.S.
Bank National Association, as trustee. The net proceeds from the sale of the Convertible Notes were approximately $729.9
million after deducting the initial purchasers' discounts and the offering expenses payable by the company. In connection with
the pricing of the Convertible Notes, the company entered into privately negotiated Capped Call Transactions (the "2020
Capped Call Transactions") and the company used the net proceeds of the offering of the Convertible Notes to pay the
aggregate amount of $104.7 million for them.
The estimated fair value of the Convertible Notes was $844.7 million as of December 28, 2024 and was determined through
consideration of quoted market prices. The fair value is classified as Level 2, as defined in Note 3 (j), Fair Value Measurements,
in these Notes to the Consolidated Financial Statements included in this Part II, Item 8 of this Annual Report on Form 10-K.
The if-converted value of the Convertible Notes exceeded their respective principal value by $46.2 million as of December 28,
2024.
The Convertible Notes are general unsecured obligations of the company. The Convertible Notes rank senior in right of
payment to any of the company’s future indebtedness that is expressly subordinated in right of payment to the Convertible
Notes; rank equal in right of payment to the company’s existing and future unsecured indebtedness that is not so subordinated;
are effectively subordinated in right of payment to any of the company’s secured indebtedness to the extent of the value of the
assets securing such indebtedness; and are structurally subordinated to all existing and future indebtedness and liabilities of the
company’s subsidiaries.
The company initially separated the Convertible Notes into liability and equity components. The equity component of the
Convertible Notes of approximately $105.0 million was included in the additional paid-in capital and the resulting debt discount
was being amortized to interest expense at an effective interest rate of 1.5%. In fiscal 2021, upon adoption of ASU 2020-06,
Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity's Own
Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, the equity
component was essentially reversed, increasing the liability and no longer requiring the company to recognize non-cash interest
expense associated with the amortization of the debt discount.
68
The Convertible Notes were issued pursuant to the Indenture and bear interest semi-annually in arrears at a rate of 1.00% per
annum on March 1 and September 1 of each year. The Convertible Notes are convertible based upon an initial conversion rate
of 7.7746 shares of the company's common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to
an initial conversion price of approximately $128.62 per share of the company's common stock. The conversion rate will be
subject to adjustment upon occurrence of certain specified events in accordance with the Indenture but will not be adjusted for
accrued and unpaid interest. Additionally, in the event of a Fundamental Change (as defined in the Indenture), holders of the
Convertible Notes may require the company to repurchase all or a portion of their Convertible Notes at a price equal to 100.0%
of the principal amount of Convertible Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date. Upon
conversion, the company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay
or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the
company's election, in respect of the remainder, if any, of the company's conversion obligation in excess of the aggregate
principal amount of the notes being converted. At December 28, 2024, none of these conditions existed.
The Convertible Notes will mature on September 1, 2025 unless they are redeemed, repurchased or converted prior to such date
in accordance with their terms. Prior to the close of business on the business day immediately preceding June 1, 2025, the notes
will be convertible at the option of the holders only under the following circumstances: (1) during any fiscal quarter
commencing after the fiscal quarter ending on January 2, 2021 (and only during such fiscal quarter), if the last reported sale
price of the company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30
consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater
than or equal to 130.0% of the conversion price for the Convertible Notes on each applicable trading day; (2) during the five
business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the
Convertible Notes for each trading day of that ten consecutive trading day period was less than 98.0% of the product of the last
reported sale price of the company's common stock and the conversion rate of the Convertible Notes on each such trading day;
(3) if the company calls such Convertible Notes for redemption; or (4) upon the occurrence of specified corporate events. On or
after June 1, 2025, the notes will be convertible at the option of the holders at any time until the close of business on the second
scheduled trading day immediately preceding the maturity date. Holders of the Convertible Notes who convert in connection
with a Make-Whole Fundamental Change or during a Redemption Period (each as defined in the Indenture) will be, under
certain circumstances, entitled to an increase in the conversion rate.
The company may settle the conversions of the Convertible Notes in cash, shares of the company's common stock or any
combination thereof at its election. The number of shares of the company's common stock issuable at the conversion price of
$128.62 per share is expected to be 5.8 million shares. However, the Capped Call Transactions are expected generally to reduce
the potential dilution of the company's common stock upon any conversion of Convertible Notes and/or offset the cash
payments the company is required to make in excess of the principal amount of the Notes. Under the 2020 Capped Call
Transactions, the number of shares of common stock issuable at the conversion price of $207.93 is expected to be 3.6 million
shares. Under the 2021 Capped Call Transactions, the number of shares of common stock issuable at the conversion prices of
$216.50 and $225.00 is expected to be 3.5 million shares and 3.3 million shares, respectively. Under the 2022 Capped Call
Transactions, the number of shares of common stock issuable at the conversion price of $229.00 is expected to be 3.3 million
shares. As of December 28, 2024, one Convertible Note has been converted to date.
The company may redeem all or any portion of the Convertible Notes, at its option, on or after September 5, 2023 and prior to
the 41st scheduled trading day immediately preceding the maturity date, at a redemption price equal to 100.0% of the principal
amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest thereon, if the last reported sales price of the
company's common stock has been at least 130.0% of the conversion price then in effect for at least 20 trading days (whether or
not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and
including, the trading day immediately preceding the date on which the company provides written notice of redemption.
The Indenture includes customary terms and covenants, including certain events of default after which the Convertible Notes
may become due and payable immediately.
69
Capped Call Transactions
In connection with the pricing of the Convertible Notes, the company entered into privately negotiated Capped Call
Transactions (the "2020 Capped Call Transactions") and the company used the net proceeds of the offering of the Convertible
Notes to pay the aggregate amount of $104.7 million for them. The company entered into two tranches of privately negotiated
Capped Call Transactions in December 2021 (the "2021 Capped Call Transactions") in the aggregate amount of $54.6 million.
On March 15, 2022, the company entered into an additional tranche of privately negotiated Capped Call Transactions (the
"2022 Capped Call Transactions") in the amount of $9.7 million.
The 2020, 2021, and 2022 Capped Call Transactions (collectively, the "Capped Call Transactions") are expected generally to
reduce the potential dilution and/or offset the cash payments the company is required to make in excess of the principal amount
of the Convertible Notes upon conversion of the Convertible Notes in the event that the market price per share of the company's
common stock is greater than the strike price of the Capped Call Transactions (which initially corresponds to the initial
conversion price of the Convertible Notes and is subject to certain adjustments under the terms of the Capped Call
Transactions), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Transactions. The
2020 Capped Call Transactions have an initial cap price of $207.93 per share of the company's common stock. The 2021
Capped Call Transactions have initial cap prices of $216.50 and $225.00 per share of the company's common stock. The 2022
Capped Call Transactions have an initial cap price of $229.00 per share. The Capped Call Transactions cover, initially, the
number of shares of the company's common stock underlying the Convertible Notes, subject to anti-dilution adjustments
substantially similar to those applicable to the Convertible Notes.
The Capped Call Transactions are separate transactions entered into by the company with the capped call counterparties, and
are not part of the terms of the Convertible Notes and will not affect any holder's right under the Convertible Notes. Holders of
the Convertible Notes will not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions do
not meet the criteria for separate accounting as a derivative as they are indexed to the company's stock. The premiums paid of
the Capped Call Transactions have been included as a net reduction to additional paid-in capital with stockholders' equity.
The aggregate amount of debt payable during each of the next five years is as follows (in thousands):
2025 (1)
$
789,023
2026
1,600,151
2027
828
2028
693
2029 and thereafter
4,372
$
2,395,067
(1) The current year debt payable includes the maturities of the convertible notes.
70
(6)
COMMON AND PREFERRED STOCK
(a)
Shares Authorized
At December 28, 2024 and December 30, 2023, the company had 95,000,000 authorized shares of common stock and
2,000,000 authorized shares of non-voting preferred stock.
(b)
Treasury Stock
In November 2017, the company's Board of Directors approved a stock repurchase program authorizing the company to
repurchase in the aggregate up to 2,500,000 shares of its outstanding common stock. In May 2022 and July 2024, the
company's Board of Directors approved the company to repurchase an additional 2,500,000 shares of its outstanding common
stock under the current program. During 2023, the company repurchased 397,738 shares of its common stock under the
program for $55.6 million, including applicable commissions, which represented an average price of $139.68. During 2024, the
company repurchased 117,526 shares of its common stock under the program for $16.4 million, including applicable
commissions, which represented an average price of $139.39. As of December 28, 2024, 3,233,890 shares had been purchased
under the 2017 stock repurchase program and 4,266,110 remain authorized for repurchase.
The company also treats shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted
share grants as common stock repurchases because they reduce the number of shares that would have been issued upon vesting.
During 2023, the company repurchased 126,704 shares of its common stock that were surrendered to the company for
withholding taxes related to restricted stock vestings for $19.8 million. During 2024, the company repurchased 118,171 shares
of its common stock that were surrendered to the company for withholding taxes related to restricted stock vestings for $18.3
million.
(c)
Share-Based Awards
The company maintains an incentive plan under which the company's Board of Directors grants share-based awards to key
employees. On May 10, 2021, the 2021 Stock Incentive Plan (the "2021 Plan") was approved, which included a maximum
amount of 1,350,000 shares allowed to be awarded plus the shares remaining for future grants under the 2011 Stock Incentive
Plan (the "2011 Plan") as of the approval date and any shares outstanding that are subsequently forfeited or expired. Thus, no
further shares are available to grant under the 2011 Plan and the maximum amount of shares available for future grants under
the 2021 Plan as of December 28, 2024 is 372,167.
Non-cash share-based compensation of $36.2 million, $51.0 million and $58.4 million was recognized for fiscal 2024, 2023 and
2022, respectively, associated with restricted share grants and restricted stock units. The company recorded a related tax benefit
of $0.1 million, $0.8 million and $1.3 million in fiscal 2024, 2023 and 2022, respectively.
Restricted share grants:
The company has issued restricted share grant awards, which are generally time and performance based and were not subject to
market conditions. The fair value of restricted share grants represents the closing share price of the company's stock as of the
date of the grant and is recognized over the vesting period of the awards. The weighted average grant date fair value was
$136.13 and $188.31 per share for restricted share grants in fiscal 2023 and 2022 respectively, which represents the closing
share price of the company’s stock as of the date of grant. The approximate fair value of restricted shares vested were $0.3
million, $0.6 million, $29.1 million for fiscal 2024, 2023 and 2022, respectively.
71
A summary of the company’s nonvested restricted share grant activity and their corresponding fair value on the date of grant for
fiscal year ended December 28, 2024 is as follows:
Shares
Weighted Average
Grant-Date
Fair Value
Nonvested shares at December 30, 2023
2,080
136.13
Granted
—
—
Vested
(2,080)
150.73
Forfeited
—
—
Nonvested shares at December 28, 2024
—
—
As of December 28, 2024, all compensation cost related to nonvested restricted share grant compensation arrangements were
recognized and there are no additional nonvested shares.
Restricted stock units:
During 2020, the company began granting restricted stock units, which entitle the holder to shares of common stock subject to
time vesting and the achievement of certain market and performance goals. The fair value for time-based units are valued at the
closing share price of the company’s stock as of the date of the grant and the fair value for performance units are based upon
valuations using the Monte Carlo Methodology. Compensation expense is recognized over the performance measurement
period of the units in accordance with ASC 718 Stock Compensation for awards with market and performance vesting
conditions.
Time vesting units vest equally over two or three years and performance units vest based on achievement of certain company
performance criteria over the two or three year period, as set forth in the grant agreement ranging from 0 to 200% of the target
shares granted. The weighted average grant date fair value was $132.38, $147.13 and $150.07 per share for restricted stock
units in fiscal 2024, 2023 and 2022, respectively. The approximate fair value of restricted stock units vested were $30.6 million
for fiscal 2024.
A summary of the company’s nonvested restricted stock unit activity at target shares and their corresponding fair value on the
date of grant for fiscal year ended December 28, 2024 is as follows:
Units
Weighted Average
Grant-Date
Fair Value
Nonvested shares at December 30, 2023
651,731
160.15
Granted
255,686
132.38
Vested
(196,425)
161.68
Forfeited
(13,314)
146.37
Nonvested shares at December 28, 2024
697,678
149.80
As of December 28, 2024, there was $48.0 million of total unrecognized compensation cost related to nonvested restricted stock
unit compensation arrangements, if all performance conditions are achieved as estimated. The remaining weighted average life
is 2.03 years.
72
(7)
INCOME TAXES
Earnings before taxes is summarized as follows (in thousands):
2024
2023
2022
Domestic
$
415,156 $
346,815 $
383,813
Foreign
162,164
172,563
180,602
Total
$
577,320 $
519,378 $
564,415
The provision for income taxes is summarized as follows (in thousands):
2024
2023
2022
Federal
$
88,770 $
67,023 $
62,416
State and local
16,510
15,934
23,892
Foreign
43,607
35,539
41,538
Total
$
148,887 $
118,496 $
127,846
Current
$
113,010 $
120,901 $
134,488
Deferred
35,877
(2,405)
(6,642)
Total
$
148,887 $
118,496 $
127,846
The reconciliation of the differences between income taxes computed at the federal statutory rate to the effective rate were as
follows:
2024
2023
2022
U.S. federal statutory tax rate
21.0 %
21.0 %
21.0 %
State taxes, net of federal benefit
3.1
3.1
3.3
Permanent differences
0.6
0.6
0.9
Foreign income tax rate at rates other than U.S. statutory
1.4
0.2
0.2
Deferred tax changes
—
—
—
Change in valuation allowances
0.2
—
—
Tax on unremitted earnings
0.7
0.4
0.3
Federal Refund
—
—
—
Internal restructuring
—
—
(2.3)
Other
(1.2)
(2.5)
(0.7)
Consolidated effective tax
25.8 %
22.8 %
22.7 %
(1) Net of changes in related tax attributes.
A tax provision of $148.9 million, at an effective rate of 25.8%, was recorded for fiscal 2024 as compared to $118.5 million at
an effective rate of 22.8%, in fiscal 2023. The fiscal 2024 tax provision includes a $3.6 million tax expense for the finalization
of the 2023 tax returns as compared to the fiscal 2023 provision that included a net tax benefit of $7.0 million for the
finalization of the 2022 tax returns. The effective rates in 2024 and 2023 were higher than the federal tax rate of 21.0%
primarily due to state taxes and foreign tax rate differentials.
73
At December 28, 2024 and December 30, 2023, the company had recorded the following deferred tax assets and liabilities (in
thousands):
2024
2023
Deferred tax assets:
Compensation related
$
20,550 $
29,135
Pension and post-retirement benefits
489
1,435
Inventory reserves
29,392
27,311
Accrued liabilities and reserves
23,185
22,017
Warranty reserves
21,293
20,956
Operating lease liability
22,423
22,096
Basis difference on affiliates
7,443
12,099
Capitalized R&D costs
45,855
39,585
Convertible debt
6,502
15,860
Net operating loss carryforwards
11,957
12,989
Other
26,180
22,871
Gross deferred tax assets
$
215,269 $
226,354
Valuation allowance
(14,054)
(15,749)
Deferred tax assets
$
201,215 $
210,605
Deferred tax liabilities:
Intangible assets
$
(318,699) $
(310,847)
Depreciable assets
(43,746)
(40,036)
Interest rate swaps
(7,587)
(10,927)
Operating lease right-of-use assets
(21,754)
(21,139)
Pension and post-retirement benefits
(22,886)
(9,719)
Other
(32,324)
(26,135)
Deferred tax liabilities
$
(446,996) $
(418,803)
Net deferred tax assets (liabilities)
$
(245,781) $
(208,198)
Long-term deferred asset
6,281
7,945
Long-term deferred liability
(252,062)
(216,143)
Net deferred tax assets (liabilities)
$
(245,781) $
(208,198)
The company has recorded tax reserves on undistributed foreign earnings not permanently reinvested of $15.0 million and
$12.0 million at December 28, 2024 and December 30, 2023, respectively. No further provisions were made for income taxes
that may result from future remittances of undistributed earnings of foreign subsidiaries that are determined to be permanently
reinvested, which were $815.0 million on December 28, 2024. Determination of the total amount of unrecognized deferred
income taxes on undistributed earnings net of foreign subsidiaries is not practicable.
The company has a deferred tax asset on net operating loss carryforwards totaling $12.0 million as of December 28, 2024.
These net operating losses are available to reduce future taxable earnings of certain domestic and foreign subsidiaries. United
States federal loss carryforwards total $8.5 million of which $2.7 million will expire through 2036 and $5.8 million have no
expiration date. State loss carryforwards total $10.0 million and expire through 2039 and international loss carryforwards total
$45.0 million that can be carried forward indefinitely. Of these carryforwards, $34.7 million are subject to full valuation
allowance.
74
As of December 28, 2024, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes
was approximately $29.6 million (of which $29.6 million would impact the effective tax rate if recognized) plus approximately
$10.0 million of accrued interest and $6.7 million of penalties. The company recognizes interest and penalties accrued related to
unrecognized tax benefits in income tax expense. Interest recognized in fiscal years 2024, 2023 and 2022 was $0.6 million, $1.4
million and $0.6 million, respectively. Penalties recognized in fiscal years 2024, 2023 and 2022 were $(0.3) million, $0.0
million and $0.2 million, respectively.
The following table summarizes the activity related to the unrecognized tax benefits for the fiscal years ended December 31,
2022, December 30, 2023 and December 28, 2024 (in thousands):
Balance at December 31, 2022
$
33,648
Increases to current year tax positions
2,126
Lapse of statute of limitations
(1,852)
Balance at December 30, 2023
$
33,922
Increases to current year tax positions
3,689
Settlements
(639)
Lapse of statute of limitations
(7,421)
Balance as of December 28, 2024
$
29,551
The company believes that it is reasonably possible that $3.9 million of its remaining unrecognized tax benefits may be
recognized by the end of 2025 as a result of settlements with taxing authorities or lapses of statutes of limitations.
In the normal course of business, income tax authorities in various income tax jurisdictions both in the United States and
internationally conduct routine audits of our income tax returns filed in prior years. These audits are generally designed to
determine if individual income tax authorities are in agreement with our interpretations of complex tax regulations regarding the
allocation of income to the various income tax jurisdictions. Income tax years are open from 2021 through the current year for
the United States federal jurisdiction. Income tax years open for our other major jurisdictions range from 2017 through the
current year. Although the company believes its tax returns are correct, the final determination of tax examinations may be
different than what was reported on the tax returns. In the opinion of management, adequate tax provisions have been made for
the years subject to examination.
75
(8)
FINANCIAL INSTRUMENTS
Derivatives are measured at fair value and recognized as either assets or liabilities. Derivatives that do not qualify as a hedge
must be adjusted to fair value in earnings. If a derivative does qualify, changes in the fair value will either be offset against the
change in the fair value of the hedged assets, liabilities or firm commitments or recognized in other accumulated comprehensive
income until the hedged item is recognized in earnings.
(a)
Foreign Exchange
The company periodically enters into derivative instruments, principally forward contracts to reduce exposures pertaining to
fluctuations in foreign exchange rates. The notional amount of foreign currency contracts outstanding was $239.3 million and
$253.1 million as of December 28, 2024 and December 30, 2023, respectively. The fair value of these forward contracts was an
unrealized loss of $1.4 million at the end of the year.
(b)
Interest Rate
The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt. Prior to
July 1, 2023, the company amended its Credit Facility and the existing interest rate swap agreements to transition the interest
reference rate from one-month LIBOR to one-month SOFR. There were no other changes to the company's Credit Facility or
timing of cash flows. The amendment was entered into because the LIBOR rate historically used was no longer published after
June 30, 2023. The company utilized expedients within ASC 848 to conclude that this amendment should be treated as a non-
substantial modification of the existing contract, resulting in no impact to the company's consolidated financial statements. The
company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in
accumulated other comprehensive income. The fair value of these instruments was an asset of $30.0 million and $42.8 million
as of December 28, 2024 and December 30, 2023, respectively. The change in fair value of these swap agreements in 2024 was
a loss of $9.6 million, net of taxes.
A summary of the company’s interest rate swaps is as follows (in thousands):
Twelve Months Ended
Location
Dec 28, 2024
Dec 30, 2023
Fair value
Prepaid expenses
$
1,986
$
2,897
Fair value
Other assets
$
27,966
$
39,882
Amount of gain/(loss) recognized in other
comprehensive income
Other comprehensive
income
$
14,377
$
10,015
Gain/(loss) reclassified from accumulated other
comprehensive income (effective portion)
Interest expense
$
27,204
$
32,221
Interest rate swaps are subject to default risk to the extent the counterparty is unable to satisfy its settlement obligations under
the interest rate swap agreements. The company reviews the credit profile of the financial institutions that are counterparties to
such swap agreements and assesses their creditworthiness prior to entering into the interest rate swap agreements and
throughout the term. The interest rate swap agreements typically contain provisions that allow the counterparty to require early
settlement in the event that the company becomes insolvent or is unable to maintain compliance with its covenants under its
existing debt agreement.
(9)
LEASE COMMITMENTS
Accounting Policy
At the commencement date of a lease, the company recognizes a liability to make lease payments and an asset representing the
right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments
over the lease term, including variable fees that are known or subject to a minimum floor. The lease liability includes lease
component fees, while non-lease component fees are expensed as incurred for all asset classes. The company's lease terms
include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When a contract
excludes an implicit rate, the company utilizes an incremental borrowing rate based on information available at the lease
commencement date including lease term and geographic region. The initial valuation of the right-of-use (“ROU”) asset
includes the initial measurement of the lease liability, lease payments made in advance of the lease commencement date and
76
initial direct costs incurred by the company and excludes lease incentives. Operating lease ROU assets are included in other
assets and operating lease liabilities are included in accrued expenses and other non-current liabilities.
Leases with an initial term of 12 months or less are classified as short-term leases and are not recorded on the Consolidated
Balance Sheets. The lease expense for short-term leases is recognized on a straight-line basis over the lease term.
Leases
The company leases warehouse space, office facilities and equipment under operating leases. The company had operating lease
costs of $39.3 million, $39.6 million and $35.7 million in fiscal 2024, 2023 and 2022 respectively, including short-term lease
expense and variable lease costs, which were immaterial in the year.
Leases (in thousands)
December 28, 2024
December 30, 2023
Operating lease right-of-use assets:
Other assets
$
121,168 $
109,373
Operating lease liabilities:
Accrued expenses
27,938
26,417
Other non-current liabilities
98,042
87,550
Total Liability
$
125,980 $
113,967
Total Lease Commitments (in thousands)
Operating Leases
2025
$
32,266
2026
28,416
2027
22,337
2028
18,295
2029
14,608
2030 and thereafter
26,156
Total future lease commitments
142,078
Less imputed interest
16,098
Total
$
125,980
Other Lease Information (in thousands, except lease term and discount
rate)
Twelve Months Ended
December 28, 2024
Twelve Months Ended
December 30, 2023
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
$
33,719
$
30,117
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
$
21,305
$
28,524
December 28, 2024
December 30, 2023
Weighted-average remaining lease terms - Operating
5.7 years
5.2 years
Weighted-average discount rate - Operating
4.3 %
3.6 %
77
(10)
SEGMENT INFORMATION
An operating segment is defined as a component of an enterprise which has discrete financial information that is evaluated
regularly. The company determined that its Chief Executive Officer is the Chief Operating Decision Maker (the "CODM") who
possesses the ultimate authority with respect to assessment of performance, allocation of resources, and all strategic actions of
the company. In performing this responsibility, the CODM regularly reviews key internal management reports, financial
information including forecasts, and quarterly results, which are prepared at the operating segment level.
In accordance with ASC 280-10, Segment Reporting, the company operates in three reportable operating segments defined by
management reporting structure and operating activities. The Company’s reportable segments are: (i) the Commercial
Foodservice Equipment Group, (ii) the Food Processing Equipment Group, and (iii) the Residential Kitchen Equipment Group.
Adjusted EBITDA is the profitability metric reported to the CODM for purposes of making decisions about allocation of
resources to each segment and assessing performance of each segment. The company defines Adjusted EBITDA as operating
income less depreciation, intangible amortization, restructuring, acquisition related adjustments, impairments, stock
compensation and other non-recurring items which management considers to be outside core operating results. The CODM
reviews this metric regularly to compare the profitability of segments, identify trends, and evaluate which segments require
additional resources or strategic adjustments. The CODM uses Adjusted EBITDA to support the allocation of resources
predominantly in the annual budget and forecasting process. The company believes that investors find this measure useful in
comparing our operating performance to that of other companies in our industry because this measure generally illustrates the
underlying performance of the business.
Management believes that inter-segment sales are made at established arm's length transfer prices. All inter-segment
transactions are eliminated and values are presented net of eliminations. The accounting policies of the segments are the same
as those described in the summary of significant accounting policies.
Additional detail about each of the reportable segments and its corporate income and expenses is set forth below:
The Commercial Foodservice Equipment Group manufactures, sells, and distributes foodservice equipment for the restaurant
and institutional kitchen industry. The Food Processing Equipment Group manufactures preparation, cooking, packaging food
handling and food safety equipment for the food processing industry. The Residential Kitchen Equipment Group manufactures,
sells and distributes kitchen equipment for the residential market.
78
The following table summarizes the results of operations for the company’s business segments(1) (dollars in thousands):
Commercial
Foodservice
Food
Processing
Residential
Kitchen
Corporate
and Other(2)
Total
2024
Net sales
$
2,419,236 $
731,003 $
724,923
$
— $ 3,875,162
Cost of sales
1,460,903
440,358
506,372
(2,840)
2,404,793
Other segment items (3,4)
294,375
103,382
144,961
61,356
604,074
Segment adjusted EBITDA (5)
663,958
187,263
73,590
(58,516)
866,295
Depreciation expense (6)
28,621
9,386
15,847
1,755
55,609
Amortization expense (7)
49,133
8,091
7,214
7,127
71,565
Net capital expenditures
23,220
12,636
12,514
940
49,310
Total assets
3,657,431
1,142,875
1,930,705
552,140
7,283,151
Long-lived assets (8)
338,989
133,994
272,644
78,222
823,849
2023
Net sales
$
2,521,471 $
720,618 $
794,516
$
— $ 4,036,605
Cost of sales
1,510,920
446,239
544,532
852
2,502,543
Other segment items (3)
311,131
95,044
154,139
73,354
633,668
Segment adjusted EBITDA (5)
699,420
179,335
95,845
(74,206)
900,394
Depreciation expense (6)
27,323
7,949
13,637
1,507
50,416
Amortization expense (7)
56,728
9,271
9,052
7,137
82,188
Net capital expenditures
39,272
14,999
25,960
4,948
85,179
Total assets
3,751,746
1,009,857
1,941,204
203,885
6,906,692
Long-lived assets (8)
340,375
98,920
227,131
95,021
761,447
2022
Net sales
$
2,394,762 $
589,969 $
1,048,122
$
— $ 4,032,853
Cost of sales
1,485,321
377,389
722,358
1,231
2,586,299
Other segment items (3)
282,385
82,437
146,675
81,649
593,146
Segment adjusted EBITDA (5)
627,056
130,143
179,089
(82,880)
853,408
Depreciation expense (6)
24,299
6,045
13,596
679
44,619
Amortization expense (7)
54,872
14,034
17,376
7,159
93,441
Net capital expenditures
28,718
13,957
20,604
4,010
67,289
Total assets
3,788,245
983,797
1,972,351
130,473
6,874,866
Long-lived assets (8)
318,457
84,370
151,499
108,478
662,804
(1) Non-operating expenses are not allocated to the reportable segments. Non-operating expenses consist of interest expense and
deferred financing amortization, foreign exchange gains and losses and other income and expense items outside of income
from operations.
(2) Includes corporate and other general company assets and operations.
(3) Other segment items for each reportable segment includes operating expenses, which primarily consists of selling, general
and administrative expenses. Other segment items excludes the impact of depreciation, intangible amortization,
restructuring, impairments, stock compensation and other items that neither relate to the ordinary course of the Company’s
business nor reflect the Company’s underlying business performance.
(4) Gain on sale of plant is included in Food Processing.
(5) Excludes the impacts mentioned in Other segment items.
(6) Includes depreciation on right of use assets.
(7) Includes amortization of deferred financing costs and Convertible Notes issuance costs.
(8) Long-lived assets consist of property, plant and equipment, long-term deferred tax assets and other assets.
79
A reconciliation of our segment information for earnings before income taxes to the corresponding amounts in the Consolidated
Statements of Earnings is shown in the table below for the periods presented:
2024
2023
2022
Adjusted EBITDA
$
866,295 $
900,394 $
853,408
Less: Other segment operating expenses (1)
210,107
265,526
213,804
Income from operations
656,188
634,868
639,604
Interest expense and deferred financing amortization, net
92,229
120,348
88,977
Net periodic pension benefit (other than service cost & curtailment)
(14,897)
(9,071)
(42,681)
Other expense, net
1,536
4,213
28,893
Earnings before income taxes
577,320
519,378
564,415
Provision for income taxes
148,887
118,496
127,846
Net earnings
$
428,433 $
400,882 $
436,569
(1) Consists of the impact of depreciation, intangible amortization, restructuring, impairments, stock compensation and other
items that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business
performance.
Geographic Information
Long-lived assets, not including goodwill and other intangibles (in thousands):
2024
2023
2022
United States and Canada
$
511,454 $
502,479 $
471,375
Asia
37,610
40,849
35,965
Europe and Middle East
264,337
205,621
142,326
Latin America
10,448
12,498
13,138
Total International
312,395
258,968
191,429
$
823,849 $
761,447 $
662,804
(11)
EMPLOYEE RETIREMENT PLANS
(a)
Pension Plans
U.S. Plans:
The company maintains a non-contributory defined benefit plan for its union employees at the Elgin, Illinois facility. Benefits
are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April
30, 2002, and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive
payments for benefits earned on or prior to April 30, 2002 upon reaching retirement age.
The company maintains a non-contributory defined benefit plan for its employees at the Smithville, Tennessee facility. Benefits
are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April
1, 2008, and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive
payments for benefits earned on or prior to April 1, 2008 upon reaching retirement age.
The company also maintains a retirement benefit agreement with its former Chairman ("Chairman Plan"). The retirement
benefits are based upon a percentage of the former Chairman’s final base salary.
Non-U.S. Plans:
The company maintains a defined benefit plan for its employees at the Wrexham, the United Kingdom facility. Benefits are
determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30,
80
2010 and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive
payments for benefits earned on or prior to April 30, 2010 upon reaching retirement age.
The company maintains several pension plans related to AGA and its subsidiaries (collectively, the "AGA Group"), the most
significant being the Aga Rangemaster Group Pension Scheme in the United Kingdom. Membership in the plan on a defined
benefit basis of pension provision was closed to new entrants in 2001. The plan became open to new entrants on a defined
contribution basis of pension provision in 2002 but was generally closed to new entrants on this basis during 2014. In
December 2020, it was agreed that the Group Pension Scheme will be closed to future pension accruals effective April 5, 2021.
The other, much smaller, defined benefit pension plans operating within the AGA Group cover employees in France and the
United Kingdom. All pension plan assets are held in separate trust funds although the net defined benefit pension obligations
are included in the company's consolidated balance sheet.
A summary of the plans’ net periodic pension cost, benefit obligations, funded status, and net balance sheet position is as
follows (dollars in thousands)
Fiscal 2024
Fiscal 2023
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Net Periodic Pension Cost (Benefit):
Interest cost
1,267
43,892
1,315
46,046
Expected return on assets
(926)
(62,289)
(873)
(58,766)
Amortization of net loss
281
204
420
186
Amortization of prior service cost
—
2,674
—
2,601
$
622 $
(15,519) $
862
$
(9,933)
Change in Benefit Obligation:
Benefit obligation – beginning of year
$
27,659 $
989,106 $
27,550
$
946,153
Interest on benefit obligations
1,267
43,892
1,315
46,046
Actuarial (gain) loss
(1,598)
(94,002)
539
1,970
Net benefit payments
(1,747)
(61,506)
(1,745)
(59,018)
Exchange effect
—
(10,348)
—
53,955
Benefit obligation – end of year
$
25,581 $
867,142 $
27,659
$
989,106
Change in Plan Assets:
Plan assets at fair value – beginning of year
$
15,751 $ 1,027,421 $
14,998
$
943,757
Company contributions
1,244
103
1,114
6,012
Investment gain
760
4,086
1,384
81,945
Benefit payments and plan expenses
(1,747)
(61,506)
(1,745)
(59,018)
Exchange effect
—
(11,755)
—
54,725
Plan assets at fair value – end of year
$
16,008 $
958,349 $
15,751
$ 1,027,421
Funded Status:
Unfunded benefit obligation
$
(9,573) $
91,207 $
(11,908) $
38,315
Amounts recognized in balance sheet at year end:
Accrued pension benefits
$
(9,573) $
91,207 $
(11,908) $
38,315
81
Fiscal 2024
Fiscal 2023
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
Pre-tax components in accumulated other comprehensive
income at period end:
Net actuarial loss
$
297
$
64,371
$
2,011
$ 103,705
Pre-tax components recognized in other comprehensive
income for the period:
Current year actuarial (gain) loss
$
(1,432)
$ (36,008)
$
28
$ (17,079)
Actuarial loss recognized
(281)
(205)
(420)
(150)
Prior service cost recognized
—
(3,121)
—
(360)
Total amount recognized
$
(1,713)
$ (39,334)
$
(392)
$ (17,589)
Accumulated Benefit Obligation
$
25,581
$ 867,119
$
27,659
$ 989,081
Salary growth rate
n/a
0.8 %
n/a
0.8 %
Assumed discount rate
5.4 %
5.5 %
4.8 %
4.6 %
Expected return on assets
6.0 %
5.9 %
6.0 %
6.2 %
The company has engaged non-affiliated third-party professional investment advisors to assist the company in developing its
investment policy and establishing asset allocations. The company's overall investment objective is to provide a return, that
along with company contributions, is expected to meet future benefit payments. Investment policy is established in
consideration of anticipated future timing of benefit payments under the plans. The anticipated duration of the investment and
the potential for investment losses during that period are carefully weighed against the potential for appreciation when making
investment decisions. The company routinely monitors the performance of investments made under the plans and reviews
investment policy in consideration of changes made to the plans or expected changes in the timing of future benefit payments.
The assets of the plans were invested in the following classes of securities (none of which were securities of the company):
U.S. Plans:
Target Allocation
Percentage of Plan Assets
2024
2023
Equity
48 %
51 %
43 %
Fixed income
40
39
42
Money market
4
2
6
Other (real estate investment trusts & commodities contracts)
8
8
9
100 %
100 %
100 %
Non-U.S. Plans:
Target Allocation
Percentage of Plan Assets
2024
2023
Equity
17 %
7 %
11 %
Fixed income
75
94
69
Alternatives/Other
6
(18)
5
Real Estate
2
10
9
Cash and cash equivalents
—
7
6
100 %
100 %
100 %
82
In accordance with ASC 820 Fair Value Measurements and Disclosures, the company has measured its defined benefit pension
plans at fair value. In accordance with ASU 2015-04, "Practical Expedient for the Measurement Date of an Employer's Defined
Benefit Obligation and Plan Assets", the company has elected to measure the pension plan assets and obligations as of the
calendar month end closest to the fiscal year end. The following tables summarize the basis used to measure the pension plans’
assets at fair value as of December 28, 2024 and December 30, 2023 (in thousands):
U.S. Plans:
Fiscal 2024
Fiscal 2023
Asset Category
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Net Asset
Value
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Net Asset
Value
Short Term Investment Fund (a)
$
414 $
— $
414 $
920 $
— $
920
Equity Securities:
Large Cap
3,805
3,805
—
2,862
2,862
—
Mid Cap
402
402
—
373
373
—
Small Cap
393
393
—
388
388
—
International
3,622
3,622
—
3,218
3,218
—
Fixed Income:
Government/Corporate
4,528
4,528
—
4,776
4,776
—
High Yield
1,143
1,143
—
1,063
1,063
—
Other
484
484
—
705
705
—
Alternative:
Global Real Estate Investment
Trust
926
926
—
663
663
—
Commodities Contracts
291
291
—
783
783
—
Total
$
16,008 $
15,594 $
414 $
15,751 $
14,831 $
920
(a)
Represents collective short term investment fund, composed of high-grade money market instruments with short
maturities.
83
Non-U.S. Plans:
Fiscal 2024
Asset Category
Total
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Net Asset
Value
Cash and cash equivalents
$
64,699 $
7,881 $
45,734 $
— $
11,084
Equity Securities:
UK
3,511
976
—
—
2,535
International:
Developed
57,153
1,531
—
—
55,622
Emerging
13,390
203
—
—
13,187
Unquoted/Private Equity
2,304
—
—
—
2,304
Fixed Income:
Government/Corporate:
UK
526,394
9,618
9,388
—
507,388
International
93,888
—
63,482
—
30,406
Index Linked
300,098
1,480
—
—
298,618
Other
315
—
—
—
315
Real Estate:
Direct
92,388
—
92,388
—
—
Indirect
3,184
33
—
—
3,151
Leveraged Loans
28,292
—
—
—
28,292
Alternative/Other
(227,267)
—
613
—
(227,880)
Total
$
958,349 $
21,722 $
211,605 $
— $
725,022
84
Fiscal 2023
Asset Category
Total
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Net Asset
Value
Cash and cash equivalents
$
64,285 $
10,175 $
25,777 $
— $
28,333
Equity Securities:
UK
3,665
45
—
—
3,620
International:
Developed
89,498
1,738
—
—
87,760
Emerging
20,698
168
—
—
20,530
Unquoted/Private Equity
282
—
—
—
282
Fixed Income:
Government/Corporate:
UK
247,618
11,049
—
—
236,569
International
133,279
—
—
—
133,279
Index Linked
322,408
2,088
—
—
320,320
Other
3,222
—
—
—
3,222
Convertible Bonds
Real Estate:
Direct
91,993
—
91,993
—
—
Indirect
1,768
37
—
—
1,731
Hedge Fund Strategy:
Equity Long/Short
8,361
—
—
—
8,361
Arbitrage & Event
10,731
—
—
—
10,731
Directional Trading & Fixed Income
315
—
—
—
315
Cash & Other
162,812
—
—
—
162,812
Direct Sourcing
913
—
—
—
913
Leveraged Loans
14,475
—
—
—
14,475
Alternative/Other
(148,902)
1,060
—
—
(149,962)
Total
$
1,027,421 $
26,360 $
117,770 $
— $
883,291
The fair value of the Level 1 assets is based on observable quoted market prices of the identical underlying security in an active
market. The fair value of the Level 2 assets is primarily based on market observable inputs to quoted market prices, benchmark
yields and broker/dealer quotes. Level 3 inputs, as applicable, represent unobservable inputs that reflect assumptions developed
by management to measure assets at fair value.
The expected return on assets is developed in consideration of the anticipated duration of investment period for assets held by
the plan, the allocation of assets in the plan, and the historical returns for plan assets.
85
Estimated future benefit payments under the plans are as follows (dollars in thousands):
U.S.
Plans
Non-U.S.
Plans
2025
$
1,909 $
60,123
2026
1,929
60,248
2027
1,941
60,734
2028
1,952
61,009
2029 through 2034
11,412
362,589
The expected contributions to the U.S. Plans to be made in 2025 is $0.6 million. For the Non-U.S. Plans, the expected
contribution is nil in 2025.
(b)
Defined Contribution Plans
As of December 28, 2024, the company maintained two separate defined contribution 401(k) savings plans covering all
employees in the United States. These two plans separately cover the union employees at the Elgin, Illinois facility and all other
remaining union and non-union employees in the United States. The company also maintained defined contribution plans for its
UK based employees.
(12)
RESTRUCTURING AND ACQUISITION INTEGRATION INITIATIVES
Residential Kitchen Equipment Group:
During fiscal years 2024 and 2023, the company initiated cost reduction initiatives related to the Residential Kitchen Equipment
Group including headcount reductions and facility consolidations. These actions resulted in expenses of $5.9 million and $9.4
million, in the twelve months ended December 28, 2024 and December 30, 2023, respectively. These actions are reflected in the
restructuring expenses in the Consolidated Statements of Earnings. The primary realization of cost savings from the
restructuring initiatives began in 2023 with cumulative expected annual savings of approximately $28.0 million. At
December 28, 2024, the restructuring obligations accrued for these initiatives are immaterial and will be substantially complete
by the end of fiscal year 2025.
The restructuring expenses for the other segments of the company were not material during fiscal years 2024, 2023 and 2022.
(13) SUBSEQUENT EVENTS
On February 25, 2025, the company announced its intent to separate its Food Processing business through a spin-off of the
Food Processing business, under which the stock of Food Processing, as a new independent publicly traded company, will be
distributed to Middleby’s shareholders. As of the date hereof, Middleby is targeting completion of the separation by early 2026,
subject to certain customary conditions, including, among others, final approval by the company’s Board of Directors and the
effectiveness of appropriate filings with the SEC. The spin-off of Food Processing is expected to be tax-free for U.S. federal
income tax purposes. There can be no assurance that any separation transaction will ultimately occur or, if one does occur, of its
terms or timing.
86
THE MIDDLEBY CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023
AND DECEMBER 31, 2022
(amounts in thousands)
Balance
Beginning
of Period
Additions/
(Recoveries)
Charged
to Expense
Other
Adjustments
(1)
Write-Offs
During
the Period
Balance
at End
of Period
Allowance for doubtful accounts; deducted
from accounts receivable on the balance
sheets-
2024
$
23,464 $
4,559 $
5 $
(3,431) $
24,597
2023
$
20,295 $
5,886 $
973 $
(3,690) $
23,464
2022
$
18,770 $
4,311 $
776 $
(3,562) $
20,295
(1) Amounts consist primarily of valuation allowances assumed from acquired companies.
Balance
Beginning
of Period
Additions/
(Recoveries)
Charged
to Expense
Write-Offs
During the
Period
Balance
at End
of Period
Valuation allowance - Deferred tax assets
2024
$
15,749 $
(1,695) $
— $
14,054
2023
$
11,599 $
4,150 $
— $
15,749
2022
$
10,222 $
1,377 $
— $
11,599
87
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The company maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report that are
designed to ensure that information required to be disclosed in the company's Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the company's management, including its Chief Executive Officer and Chief Financial
Officer as appropriate, to allow timely decisions regarding required disclosure.
The company carried out an evaluation, under the supervision and with the participation of the company's management,
including the company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation
of the company's disclosure controls and procedures as of December 28, 2024. Based on the foregoing, the company's Chief
Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective
as of the end of this period.
Changes in Internal Control Over Financial Reporting
During the quarter ended December 28, 2024, there have been no changes in the company's internal controls over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or
are reasonably likely to materially affect, the company's internal control over financial reporting.
88
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. Our internal control over financial reporting includes those policies and procedures that:
(i)
pertain to the maintenance of records that in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets;
(ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of our management and directors; and
(iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (COSO). Our assessment of the internal control structure excluded GBT GmbH Bakery
(acquired February 7, 2024), MaxMac (acquired April 19, 2024), Emery Thompson (acquired October 11, 2024), JC Ford
(acquired November 1, 2024) and Gorreri (acquired November 26, 2024).
These acquisitions constitute 0.0% and 2.5% of net and total assets, respectively, 0.6% of net sales and (0.1)% of net income of
the consolidated financial statements of the company as of and for the year ended December 28, 2024. These acquisitions are
included in the consolidated financial statements of the company as of and for the year ended December 28, 2024. Under
guidelines established by the Securities Exchange Commission, companies are allowed to exclude acquisitions from their
assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired
companies.
Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our
internal control over financial reporting was effective as of December 28, 2024.
Ernst & Young LLP, independent registered public accounting firm, who audited and reported on the consolidated financial
statements of the company included in this report, has issued a report on the effectiveness of the company's internal control over
financial reporting as of December 28, 2024.
The Middleby Corporation
February 26, 2025
89
Item 9B. Other Information
Insider Trading Arrangements
During the fiscal quarter ended December 28, 2024, none of our directors or officers subject to Section 16 of the Exchange Act
adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term
is defined in Item 408 of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
Item 10. Directors, Executive Officers and Corporate Governance
The company has adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of our
securities by directors, officers, employees and consultants, as well as the Company itself, that are reasonably designed to
promote compliance with insider trading laws, rules and regulations, and applicable listing standards. A copy of our Policy on
Insider Trading is filed with this Annual Report on Form 10-K as Exhibit 19.1.1.
PART III
Pursuant to General Instruction G (3), of Form 10-K, the information called for by Part III Item 10 (Directors, Executive
Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and
Director Independence) and Item 14 (Principal Accountant Fees and Services), is incorporated herein by reference from the
registrant’s definitive proxy statement filed with the Commission pursuant to Regulation 14A not later than 120 days after the
end of the fiscal year covered by this Annual Report on Form 10-K.
90
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)
1.
Financial Statements
The financial statements listed on Page 53 are filed as part of this Annual Report on Form 10-K.
3.
Exhibits
3.1
Restated Certificate of Incorporation of The Middleby Corporation (effective as of May 13,
2005), incorporated by reference to the company's Form 8-K, Exhibit 3.1, dated April 29,
2005, filed on May 17, 2005.
3.2
Fourth Amended and Restated Bylaws of The Middleby Corporation (effective as of
February 26, 2021), filed on March 3, 2021.
3.3
Certificate of Amendment to the Restated Certificate of Incorporation of The Middleby
Corporation (effective as of May 3, 2007), incorporated by reference to the company’s
Form 8-K, Exhibit 3.1, dated May 3, 2007, filed on May 3, 2007.
3.4
Certificate of Amendment to the Restated Certificate of Incorporation of The Middleby
Corporation (effective as of May 8, 2014), incorporated by reference to the company's Form
8-K, Exhibit 3.1, dated May 6, 2014, filed on May 8, 2014.
4.1
Certificate of Designations dated October 30, 1987, and specimen stock certificate relating
to the company Preferred Stock, incorporated by reference from the company’s Form 10-K,
Exhibit (4), for the fiscal year ended December 31, 1988, filed on March 15, 1989.
4.2
Indenture (including form of Global Note) with respect to The Middleby Corporation’s
1.00% Convertible Senior Notes due 2025, dated as of August 21, 2020, between The
Middleby Corporation and U.S. Bank National Association, as trustee, incorporated by
reference to the company's Form 8-K Exhibit 4.1 filed on August 21, 2020.
4.3
Form of Global Note for the 1.00% Convertible Senior Notes due 2025 incorporated by
reference to the company's Form 8-K Exhibit 4.1 filed on August 21, 2020.
4.4
Description of the Company's Securities Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934, incorporated by reference to the company's Form 10-K Exhibit 4.4
for the fiscal year ended January 2, 2021, filed on March 3, 2021.
10.1
Eighth Amended and Restated Credit Agreement, dated as of October 21, 2021, among
Middleby Marshall Inc., The Middleby Corporation, the Subsidiary Borrowers named
therein, the lenders named therein and Bank of America, N.A., as administrative agent for
the lenders, incorporated by reference to the company's Form 8-K Exhibit 10.1 filed on
October 21, 2021.
10.2*
2021 Long-Term Incentive Plan, incorporated by reference to Appendix A to the
company’s definitive proxy statement filed with the Securities and Exchange Commission
on March 31, 2021.
10.3*
The Middleby Corporation Value Creation Incentive Plan, incorporated by reference to
Appendix B to the company’s definitive proxy statement filed with the Securities and
Exchange Commission on April 1, 2011.
10.4#
Form of Restricted Stock Unit Award Agreement for The Middleby Corporation 2021
Long-Term Incentive Plan.
10.5#
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors for The
Middleby Corporation 2021 Long-Term Incentive Plan.
10.6*
Employment Agreement, dated as of March 10, 2022, by and among The Middleby
Corporation, Middleby Marshall Inc. and Timothy J. FitzGerald incorporated by reference
to the company's Form 8-K Exhibit 10.1, filed on March 14, 2022.
19.1#
Insider Trading Compliance Program*
21.1
List of subsidiaries.
23.1
Consent of Ernst & Young LLP.
91
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act, as amended.
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act, as amended.
32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1*
Clawback Policy
101
Financial statements on Form 10-K for the year ended December 28, 2024, filed on
February 26, 2025, formatted in Inline Extensive Business Reporting Language (XBRL); (i)
consolidated balance sheets, (ii) consolidated statements of earnings, (iii) consolidated
statements of cash flows, (iv) notes to the consolidated financial statements.
104
Cover Page Interactive Data File (formatted in iXBRL) and contained in Exhibit 101).
*
Designates management contract or compensation plan.
# Filed herewith.
(c)
See the financial statement schedule included under Item 8.
92
Item 16. Form 10-K Summary
None
93
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 26th day of February 2025.
THE MIDDLEBY CORPORATION
BY:
/s/ Bryan E. Mittelman
Bryan E. Mittelman
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated on February 26, 2025.
Signatures
Title
PRINCIPAL EXECUTIVE OFFICER
/s/ Timothy J. FitzGerald
Chief Executive Officer and Director
Timothy J. FitzGerald
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER
/s/ Bryan E. Mittelman
Chief Financial Officer,
Bryan E. Mittelman
Principal Financial Officer and
Principal Accounting Officer
DIRECTORS
/s/ Gordon O'Brien
Chairman of the Board, Director
Gordon O'Brien
/s/ Sarah Palisi Chapin
Director
Sarah Palisi Chapin
/s/ Cathy L. McCarthy
Director
Cathy L. McCarthy
/s/ John R. Miller, III
Director
John R. Miller, III
/s/ Robert Nerbonne
Director
Robert Nerbonne
/s/ Nassem Ziyad
Director
Nassem Ziyad
/s/ Stephen R. Scherger
Director
Stephen R. Scherger
/s/ Tejas P. Shah
Director
Tejas P. Shah
94
EXHIBIT 21.1
Subsidiaries of The Middleby Corporation(1)
State/Country of
Name of Subsidiary
Incorporation/Organization
AGA Home, Inc.
Delaware
AGA Rangemaster Group Ltd
United Kingdom
AGA Rangemaster Ltd
United Kingdom
AGA Rangemaster Properties Ltd
United Kingdom
AGA Ranges, Inc.
Delaware
AGA Rayburn Ltd
United Kingdom
Alkar Holdings, Inc.
Wisconsin
Alkar-RapidPak, Inc.
Wisconsin
American Permanent Ware Company, LLC
Delaware
Anetsberger, LLC
Delaware
ARG Corporate Services Ltd
United Kingdom
Armor Inox Holding France S.A.S.
France
Armor Inox Production S.a.r.l.
France
Armor Inox S.A.S.
France
Armor Inox Services S.A.S.
France
Armor Inox USA LLC
Delaware
Associated American Industries, LLC
Texas
Auto-Bake Acquisition Pty. Ltd
Australia
Auto-Bake Pty Ltd
Australia
Automatic Bar Controls, Inc.
Delaware
Bakers Pride Oven Company, LLC
Delaware
Baker Thermal Solutions LLC
Delaware
Beech Ovens LLC
Delaware
Beech Ovens Pty Ltd
Australia
Blue Sparq, Inc.
Florida
Brava Home, Inc.
Delaware
Britannia Kitchen Ventilation
United Kingdom
Burford Bakery Solutions Limited
United Kingdom
Burford Corp
Oklahoma
Carter-Hoffmann LLC
Delaware
Catering Equipment Industry srl
Italy
Cinoxplan, S.L.U.
Spain
Cloverleaf AM Essex, LLC
Delaware
CM Brewing Technologies, LLC
California
Cooking Solutions Group, LLC
Delaware
CookTek Induction Systems, LLC
Delaware
Colussi Ermes S.r.l.
Italy
Cozzini Middleby de Mexico, S. de R.L.de C.V.
Mexico
Cozzini, LLC
Delaware
Danfotech Holdings, LLC
Delaware
Danfotech Inc.
Missouri
DBT Holdings LLC
Delaware
Desmon S.p.A.
Italy
Emery Thompson Machine & Supply Co.
Florida
Escher Mixers S.r.l.
Italy
Evo America, LLC
Delaware
F.R. Drake Company
Delaware
Fab-Asia Inc.
Philippines
Field Service Solutions
Arkansas
Filtration Automation, LLC
Texas
Firex S.r.l.
Italy
Flavor Burst, LLC
Delaware
Follett Europe Polska sp. z.o.o.
Poland
Follett International sp. z.o.o.
Poland
Follett Products, LLC
Delaware
Food Processing Holdings Ltd
United Kingdom
G.S. Blodgett, LLC
Delaware
Globe Food Equipment Company
Ohio
Globe Food Equipment Holding Company
Delaware
Goldstein Eswood Commercial Cooking Pty Ltd
Australia
Goldstein Properties Pty Ltd
Australia
Gorreri S.r.l.
Italy
Grand Rise International Limited
Hong Kong
Grange Furniture Inc.
Delaware
Holman Cooking Equipment Inc.
Delaware
Houno A/S
Denmark
Houno Holdings LLC
Delaware
Icetro America, Inc.
California
Icetro Co. Ltd.
Korea
IMA Co. Ltd.
Korea
Imperial Machine Company Ltd
United Kingdom
Inline Filling Systems, LLC
Florida
Jade Range LLC
Delaware
J.C. Ford Company, LLC
Delaware
Josper, S.A.
Spain
Keylog S.r.l.
Italy
Kamado Joe Europe BV
Netherlands
Kamado Joe Deutchland GmbH
Germany
Kamado Joe UK Limited
United Kingdom
KJ UK Holdings Limited
United Kingdom
Kloppenberg Products, LLC
Delaware
Lab2Fab, LLC
Delaware
LA Cornue SAS
France
Lincat Group Ltd.
United Kingdom
Lincat Limited.
United Kingdom
Marco Beverage System Limited
Ireland
Masterbuilt II, Inc.
Delaware
Masterbuilt Holdings, LLC
Delaware
Masterbuilt Outdoor IP Holdings, Inc.
Delaware
Maurer-Atmos Middleby GmbH
Germany
Maxmac
Brazil
MEP FMS Holdings, LLC
Delaware
Middleby Advantage, LLC
Delaware
Middleby Asia Ltd
Hong Kong
Middleby Canada Company, Inc.
Canada
Middleby Celfrost Innovations Pvt Ltd
India
Middleby China Corporation
Peoples Republic of China
Middleby Coffee Solutions Group, LLC
Delaware
Middleby Cozzini Brasil Equipamentos, Ltda
Brazil
Middleby Denmark Holdings ApS
Denmark
Middleby Deutschland
Germany
Middleby do Brasil Ltda
Brazil
Middleby Espana SLU
Spain
Middleby Europe SL
Spain
Middleby Foodservice Equipment Corporation
Peoples Republic of China
Middleby Food Processing Europe S.r.l.
Italy
Middleby Food Service Equipment Co., Ltd
Peoples Republic of China
Middleby Holding UK Ltd
United Kingdom
Middleby India Engineering Pvt Ltd
India
Middleby Lux Holdings SCS
Luxembourg
Middleby Luxembourg S.a.r.l.
Luxembourg
Middleby Marshall Holding, LLC
Delaware
Middleby Marshall, Inc.
Delaware
Middleby Nationals Sales LLC
Delaware
Middleby Packaging Solutions, LLC
Delaware
Middleby Philippines Corporation
Philippines
Middleby Sweden Holdings AB
Sweden
Middleby UK Ltd
United Kingdom
Middleby UK Residential Holdings
United Kingdom
Middleby Worldwide Australia Pty Ltd
Australia
Middleby Worldwide Mexico SA de CV
Mexico
Middleby Worldwide Middle East FZE
Dubai
Middleby Worldwide Philippines
Philippines
Middleby Worldwide, Inc.
Florida
Middleby XME S.L.U.
Spain
MP Equipment, LLC
Delaware
MWW Food Processing USA LLC
Delaware
New Star International Holdings, Inc.
Delaware
Newton CFV, LLC
Delaware
Newton CFV, Inc.
Delaware
Nieco, LLC
Delaware
Northland Corporation
Michigan
Pacproinc, LLC
Delaware
Novy GmBH
Germany
Novy Invest NV
Belgium
Novy Netherlands BV
Netherlands
Novy NV
Belgium
Novy SAS France
France
Pengyuan Technology (Shenzhen) Co, LTD.
Peoples Republic of China
Pitco Frialator, LLC
Delaware
Premier Specialty Brands, LLC
Delaware
Proxaut S.r.l.
Italy
Powerhouse Dynamics, LLC
Delaware
QualServ Solutions LLC
Delaware
Scanico A/S
Denmark
SD Group Intressenter (SDGI)
Sweden
Spenuzza, Inc.
California
Spooner Vicars Bakery Systems
United Kingdom
Star International Holdings, Inc.
Delaware
Star Manufacturing International Inc.
Delaware
Steel Union S.r.l.
Italy
Stewart Systems Baking, LLC
Delaware
Sveba-Dahlen Aktiebolag
Sweden
Sveba Dahlen Baltic OÜ
Estonia
Sveba-Dahlen España
Spain
Sveba-Dahlen Group AB
Sweden
Systems IV
California
Taylor Company S.r.l.
Italy
Taylor Commercial Foodservice, LLC
Delaware
Taylor Food Service Equipment Trading (Shanghai) Co. Ltd
China
The Alluvian Spa, LLC
Mississippi
The Alluvian, LLC
Mississippi
Thurne-Middleby Ltd
United Kingdom
Terry LLC
Arizona
Trade-Wind Manufacturing, LLC
Arizona
TurboChef Technologies, LLC
Delaware
ULC Holding Company
Delaware
U-Line Corporation
Wisconsin
Varimixer A/S
Denmark
Ve.Ma.C. S.r.l.
Italy
Viking Cooking Schools, LLC
Mississippi
Viking Culinary Group, LLC
Mississippi
Viking Range Brasil Participacoes Ltda
Brazil
Viking Range Corporation do Brasil Importacao e Comercio Ltda
Brazil
Viking Range, LLC
Delaware
Viking West, Inc.
California
Waterford Stanley Ltd
Ireland
Wells Bloomfield LLC
Delaware
Wild Goose Canning Technologies, LLC
Colorado
Wunder-Bar Europe S.r.o.
Czech Republic
Wunder-Bar Dispensing UK Ltd
United Kingdom
Wunder-Bar Holdings, Inc.
Delaware
Wunder-Bar International, Inc.
California
(1) Certain subsidiaries have been omitted as allowed.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-259055) pertaining
to The Middleby Corporation 2021 Long-Term Incentive Plan, of our reports dated February 26, 2025, with respect
to the consolidated financial statements and schedule listed in the Index at Item 8 of The Middleby Corporation and
the effectiveness of internal control over financial reporting of The Middleby Corporation, included in this Annual
Report (Form 10-K) for the year ended December 28, 2024.
/s/ Ernst & Young LLP
Chicago, Illinois
February 26, 2025
EXHIBIT 31.1
CERTIFICATIONS
I, Timothy J. FitzGerald, certify that:
1.
I have reviewed this Annual Report on Form 10-K of The Middleby Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent function):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal controls over financial reporting.
Date: February 26, 2025
/s/ Timothy J. FitzGerald
Timothy J. FitzGerald
Chief Executive Officer of The Middleby Corporation
EXHIBIT 31.2
CERTIFICATIONS
I, Bryan E. Mittelman, certify that:
1.
I have reviewed this Annual Report on Form 10-K of The Middleby Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent function):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal controls over financial reporting.
Date: February 26, 2025
/s/ Bryan E. Mittelman
Bryan E. Mittelman
Chief Financial Officer of The Middleby Corporation
EXHIBIT 32.1
CERTIFICATION BY THE PRINCIPAL EXECUTIVE OFFICER OF
THE MIDDLEBY CORPORATION
PURSUANT TO RULE 13A-14(b) UNDER THE EXCHANGE ACT AND
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
This certification is being furnished pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
I, Timothy J. FitzGerald, Chief Executive Officer (principal executive officer) of The Middleby Corporation (the “Registrant”),
certify, to the best of my knowledge, based upon a review of the Annual Report on Form 10-K for the period ended
December 28, 2024 of the Registrant (the “Report”), that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2)
The information contained in the Report fairly presents, in all material aspects, the financial condition and
results of operations of the Registrant.
Date: February 26, 2025
/s/ Timothy J. FitzGerald
Timothy J. FitzGerald
EXHIBIT 32.2
CERTIFICATION BY THE PRINCIPAL FINANCIAL OFFICER OF
THE MIDDLEBY CORPORATION
PURSUANT TO RULE 13A-14(b) UNDER THE EXCHANGE ACT AND
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)
This certification is being furnished pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
I, Bryan E. Mittelman, Chief Financial Officer (principal financial officer) of The Middleby Corporation (the “Registrant”),
certify, to the best of my knowledge, based upon a review of the Annual Report on Form 10-K for the period ended
December 28, 2024 of the Registrant (the “Report”), that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
(2)
The information contained in the Report fairly presents, in all material aspects, the financial condition and
results of operations of the Registrant.
Date: February 26, 2025
/s/ Bryan E. Mittelman
Bryan E. Mittelman
EXHIBIT 97.1
Clawback Policy
Introduction
The Board of Directors (the “Board”) of The Middleby Corporation (the “Company”) believes that it is in the best interests of
the Company and its shareholders to create and maintain a culture that emphasizes integrity and accountability and that
reinforces the Company’s pay-for-performance compensation philosophy. The Board has therefore adopted this policy which
provides for the recoupment of certain executive compensation in the event of an accounting restatement resulting from
material noncompliance with financial reporting requirements under the federal securities laws (the “Policy”). This Policy is
designed to comply with Section 10D of the Securities Exchange Act of 1934 (the “Exchange Act”).
Administration
This Policy shall be administered by the Board or, if so designated by the Board, the Compensation Committee, in which case
references herein to the Board shall be deemed references to the Compensation Committee. Any determinations made by the
Board shall be final and binding on all affected individuals.
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Board in accordance with
Section 10D of the Exchange Act and the listing standards of the national securities exchange on which the Company’s
securities are listed, and such other senior executives who may from time to time be deemed subject to the Policy by the Board
(“Covered Executives”).
Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s
material noncompliance with any financial reporting requirement under the securities laws, the Board will require
reimbursement or forfeiture of any excess Incentive Compensation received by any Covered Executive during the three (3)
completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement.
Incentive Compensation
For purposes of this Policy, Incentive Compensation means any of the following; provided that, such compensation is granted,
earned, or vested based wholly or in part on the attainment of a financial reporting measure:
a.
Annual bonuses and other short- and long-term cash incentives
b.
Stock options
c.
Stock appreciation rights
d.
Restricted stock
e.
Restricted stock units
f.
Performance shares
g.
Performance units
Excess Incentive Compensation: Amount Subject to Recovery
The amount to be recovered will be the excess of the Incentive Compensation paid to the Covered Executive based on the
erroneous data over the Incentive Compensation that would have been paid to the Covered Executive had it been based on the
restated results, as determined by the Board.
If the Board cannot determine the amount of excess Incentive Compensation received by the Covered Executive directly from
the information in the accounting restatement, then it will make its determination based on a reasonable estimate of the effect of
the accounting restatement.
Method of Recoupment
The Board will determine, in its sole discretion, the method for recouping Incentive Compensation hereunder which may
include, without limitation:
a.
requiring reimbursement of cash Incentive Compensation previously paid;
a.
seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any
equity-based awards;
a.
offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
a.
cancelling outstanding vested or unvested equity awards; and/or
a.
taking any other remedial and recovery action permitted by law, as determined by the Board.
No Indemnification
The Company shall not indemnify any Covered Executives against the loss of any incorrectly awarded Incentive Compensation.
Interpretation
The Board is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable
for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the
requirements of Section 10D of the Exchange Act and any applicable rules or standards adopted by the Securities and Exchange
Commission or any national securities exchange on which the Company’s securities are listed.
Effective Date
This Policy shall be effective as of the date it is adopted by the Board (the “Effective Date”) and shall apply to Incentive
Compensation that is approved, awarded or granted to Covered Executives on or after that date, and shall apply to any Incentive
Compensation that previously was approved, awarded or granted to Covered Executives that was made subject to any
recoupment or other similar policies adopted by the Board from time to time.
Amendment; Termination
The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to reflect
final regulations adopted by the Securities and Exchange Commission under Section 10D of the Exchange Act and to comply
with any rules or standards adopted by a national securities exchange on which the Company’s securities are listed. The Board
may terminate this Policy at any time.
Other Recoupment Rights
The Board intends that this Policy will be applied to the fullest extent of the law. The Board may require that any employment
agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the
grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. Any right of
recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be
available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or
similar agreement and any other legal remedies available to the Company.
Impracticability
The Board shall recover any excess Incentive Compensation in accordance with this Policy unless such recovery would be
impracticable, as determined by the Board in accordance with Rule 10D-1 of the Exchange Act and the listing standards of the
national securities exchange on which the Company’s securities are listed.
Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors,
administrators or other legal representatives.
COMMERCIAL FOODSERVICE EQUIPMENT
FOOD PROCESSING
RESIDENTIAL KITCHEN
COOKING AND FOOD PREPARATION
BEVERAGE AND ICE
AUTOMATION AND IoT
EXECUTIVE OFFICERS
Timothy J. FitzGerald
Chief Executive Officer
Bryan E. Mittelman
Chief Financial Officer
Brittany C. Cerwin
Chief Accounting Officer
Matthew R. Fuchsen
Chief Development Officer
James K. Pool III
Chief Technology and
Operations Officer
Steven P. Spittle
Chief Commercial Officer
TRANSFER AGENT AND REGISTRAR
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
BOARD OF DIRECTORS
Gordon J. O’Brien 4, 7
Managing Partner
Cannon Capital
Julie M. Bowerman6
Chief Marketing Officer
Kellanova
Sarah Palisi Chapin5, 6
Principal
Chapin Creative, LLC
Timothy J. FitzGerald
Chief Executive Officer
The Middleby Corporation
Edward P. Garden 4
Chief Investment Officer
Garden Investments
Cathy L. McCarthy 1, 2, 6
Chief Executive Officer
Cross Tack, Inc.
Robert A. Nerbonne 6
Retired, Executive Vice President
Cooper-Atkins, Corporation
Stephen R. Scherger 2, 3, 4
Executive Vice President and
Chief Financial Officer
Graphic Packaging Holding Co.
Tejas P. Shah 2
Global CIO
Fluence Energy
Nassem A. Ziyad 2
Executive Chairman
Ziyad Brothers Importing
CORPORATE HEADQUARTERS
The Middleby Corporation
1400 Toastmaster Drive
Elgin, Illinois 60120
847 741 3300
FAX 847 741 0015
INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS
Ernst & Young LLP
Chicago, Illinois
STOCK MARKET INFORMATION
The Middleby Corporation is traded
on the NASDAQ Stock Market LLC
under the symbol “MIDD.”
INVESTOR RELATIONS
For additional information:
The Middleby Corporation
1400 Toastmaster Drive
Elgin, IL 60120
investors@middleby.com
847 741 3300
or visit www.middleby.com
1 Chair of Audit Committee
2 Audit Committee Member
3 Chair of Compensation Committee
4 Compensation Committee Member
5 Chair of Nominating and Corporate Governance Committee
6 Nominating and Corporate Governance Committee Member
7 Non-Executive Chairman of the Board
CORPORATE INFORMATION
STOCK PRICE PERFORMANCE
1400 Toastmaster Drive
Elgin, Illinois 60120
www.middleby.com
www.middlebyresidential.com
www.middprocessing.com