Shares of Middleby Corporation (MIDD -1.02%) are up a strong 12.3% at 12:45 p.m. EDT after the maker of restaurant kitchen equipment reported second-quarter earnings this morning.
Analysts had forecast that Middleby would earn $0.41 per diluted share (adjusted) for the quarter on sales of $445.9 million. Instead, Middleby turned in a pro forma profit of $0.55 on sales of $472 million.
The news wasn't all good. While Middleby exceeded expectations for pro forma profit, its earnings as calculated according to generally accepted accounting principles (GAAP) were down significantly from last year, a victim of the coronavirus that closed restaurant kitchens across the nation. On a sales decline of 38%, GAAP earnings plunged 76% year over year to just $0.39 per share.
Conceding that "the COVID-19 pandemic has had a major impact on our business," Middleby says it has "moved swiftly to adapt," reducing its operating costs by about 22% year over year to partially offset the revenue decline, for example. And incredibly, despite the earnings decline, Middleby managed both to remain profitable during the quarter and even to increase its free cash flow by 36% to $73.5 million in the quarter.
Management did not provide specific guidance for what to expect in Q3 and beyond but noted that "as we progressed through the month of July, business activity across all of our foodservice segments demonstrated continual improvement," in particular in sales to "quick-serve and pizza restaurants" but also to customers in the healthcare, convenience store, and retail industries.
While the restaurant industry remains far from healthy, Middleby believes that "order demand will remain improved from the second quarter." It's growing off of a smaller base, admittedly -- but growing nonetheless.