Going through an executive transition is a challenge for any company, and it's especially difficult for shareholders when they don't have any advance warning that a change in the corporate suite could be coming. For Middleby (NASDAQ:MIDD), the surprise departure of former CEO Selim Bassoul came as a shock, raising questions about the health of the business and how the company would move forward with its growth initiatives.

Coming into Wednesday's fourth-quarter financial report, Middleby investors wanted to see continued strong growth in its financials, but they also wanted reassurance that there weren't any more hidden surprises. Middleby's numbers were solid, and the food-equipment company's outlook for 2019 created more enthusiasm about the stock's prospects.

Large commercial kitchen with multiple tables, ovens, and cook stations, as well as extensive equipment.

Image source: Getty Images.

Middleby brings relief to investors

Middleby's fourth-quarter results showed that the company's underlying business remains strong. Revenue jumped 20%, to $756.7 million, outpacing the 17% growth rate that most of those following the stock were expecting to see. Net income rebounded 26%, to $94.8 million, and that produced earnings of $1.70 per share. That was above the consensus forecast among investors for $1.65 per share.

Organic growth levels perked up from recent quarters, helping to build up Middleby's momentum. Acquisitions accounted for 17 percentage points of its top-line growth, but organic sales were up 3.3% compared to the fourth quarter of 2017, reversing trends from earlier in the year that turned organic growth rates for the full year negative.

Middleby saw different performance from its business segments. The commercial foodservice equipment business enjoyed a 27% rise in revenue, due largely to four key acquisitions. But organic sales gains for the unit were still 5.3%, accelerating from recent quarters.

Similar conditions prevailed in the food-processing equipment group, where a 24% rise in sales was pretty much entirely due to acquired businesses. Only the residential kitchen-equipment group weighed on results, with a 1.3% drop in segment revenue. Even there, though, revenue at the unit's core businesses came in at 3% on a big boost in sales of the company's Viking brand of kitchen products.

Margin deterioration also slowed down during the quarter. Gross margin fell from year-ago levels, but the latest reading of 37.1% was less than 1 percentage point lower. Lower tax rates continued to help profits.

What's ahead for Middleby?

New CEO Tim FitzGerald described everything going on at the company at length, but his takeaway comment about the food-processing equipment group was optimistic. "Against the backdrop of a difficult 2018," FitzGerald said, "we have made significant investments in new product development and are excited about the launch of these innovations in 2019." The CEO added positive comments for other business lines, as well.

Looking ahead, Middleby sees plenty of promise. In commercial foodservice equipment, the company hopes that its newly realigned sales team will capitalize on opportunities to grow its line of business, and the debut of the Crown Steam line of steam-cooking solutions should bolster interest in Middleby. Viking's resurgence in the residential kitchen-equipment group comes as extremely good news, even though some challenging market conditions in the U.K. have held back Middleby's AGA Rangemaster business.

Finally, Middleby tried to make it clear that the transition from Bassoul to FitzGerald was a smooth one. As the CEO explained it, "Selim leaves in place a deeply embedded culture of innovation, customer focus, and entrepreneurial spirit, which will continue to thrive within Middleby and remain as a key factor in our ongoing success." In addition, FitzGerald called out Middleby's management team, with its experience and dedication remaining vital assets to foster the company's long-term prospects.

Middleby investors were happy about the news, and the stock soared 6% at midday following the announcement. With reassurance that the vision for Middleby's future remains intact, shareholders can get back to watching the kitchen-equipment specialist's turnaround continue to take shape and produce results in the months and years to come.