What: Middleby Corp. (MIDD 1.13%) -- a manufacturer of commercial kitchen equipment for a wide range of clients, from goliath McDonald's to neighborhood operations -- checked in with disappointing third-quarter results, sending the stock 10% lower during early Wednesday trading.
So what: Middleby's net sales increased 11.1% compared to last year's third quarter, to $449 million, which was higher than analyst estimates of $446.5 million. Unfortunately, that beat didn't trickle down to Middleby's bottom line, where its net income fell 18% to $48.8 million. Adjusted for currency headwinds and other extraordinary costs, Middleby's adjusted earnings fell two pennies short of analyst expectations of $1.04 per share.
Selim A. Bassoul, chairman and chief executive officer, said in a press release:
Although we reported an organic sales decline of 4.4% on a constant currency basis at the Food Processing Equipment Group, we realized strong incoming order rates, which have increased by approximately 20% year to date in comparison to the prior-year period. Given the current backlog and expected timing of shipments, we expect to realize revenue growth in the fourth quarter and will be well positioned going into 2016. We also continued to see improvement in profitability at this segment with EBITDA margins in excess of 25% during the quarter.
Now what: Investors hoped that Middleby would rebound and post stronger growth, which has been a stable of the company in previous years, but that rebound will have to wait at least another quarter. Looking ahead, investors will want to watch the new lineup of Viking ranges, cooktops, and other products that have garnered much hype heading into 2016. Also, investors will want to hear how Middleby continues to create synergies with its existing businesses and its acquisition of AGA Rangemaster Group. While this wasn't the rebound investors were hoping for, Middleby's long-term investing thesis remains intact.
