The Middleby Corporation

03/04/2026 | Press release | Distributed by Public on 03/04/2026 16:07

Annual Report for Fiscal Year Ending January 3, 2025 (Form 10-K)

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 and tariffs;
•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 credit markets 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.
Discontinued Operations
On December 4, 2025, the company entered into a partnership interest purchase agreement to sell a 51% stake in its Residential Kitchen Equipment Group to an affiliate of 26North Partners LP in a transaction valuing the business at $885 million (the "Residential Transaction").
The Residential Transaction was completed on February 2, 2026. Following the close of the Residential Transaction, the company owns a 49% non-controlling interest in a new standalone joint venture holding the business. The company received net cash proceeds of approximately $565 million and a $135 million promissory note from the joint venture, subject to future closing adjustments.
The results of the Residential Kitchen Equipment Group are presented as discontinued operations in the company's Consolidated Financial Statements. The Residential Kitchen Equipment Group was historically presented as a reportable segment. See Notes 1 and 12 to the Consolidated Financial Statements for further details.
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 in the second quarter of 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
The current domestic and international political environment has contributed to uncertainty surrounding the future state of the global economy. Recent significant trade policy and tariff actions by the U.S. government and many other countries have created significant uncertainty and potential risks for the company. The tariffs imposed to date have increased the cost of certain raw materials and components, and while the company is actively exploring opportunities to mitigate these increased costs, there can be no assurance of the company's ability to offset the impact of these tariffs fully. Furthermore, the imposition of retaliatory tariffs from other countries on the company's exported products could negatively affect demand and future sales volumes. The long-term effects of current and future tariffs and any future trade policy changes on the global economy and the industries in which the company operates remain uncertain and could have a material adverse effect on our financial statements in any particular reporting period. Even in light of such headwinds, we remain focused on delivering strong financial results and executing on our long-term strategy and profitability objectives, as well as continuing to identify operational efficiencies in all aspects of our business.
In addition to tariffs, 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. Recently announced interest rate cuts are expected to reduce demand headwinds in the long term; however consumer demand in the near term has and may continue to be impacted by higher inflation levels and uncertainty surrounding the Federal Reserve's future interest rate policy decisions.
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 and uncertain given trade policy and tariff actions. The decreased availability of resources and inflationary costs have resulted in heightened inventory 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)
2025 2024 2023
Sales Percent Sales Percent Sales Percent
Business Segments:
Commercial Foodservice $ 2,351,047 73.4 % $ 2,380,384 75.6 % $ 2,485,317 76.7 %
Food Processing $ 850,155 26.6 $ 769,855 24.4 $ 756,773 23.3
Total $ 3,201,202 100.0 % $ 3,150,239 100.0 % $ 3,242,090 100.0 %
(1)The company's fiscal year ends on the Saturday nearest to December 31.
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)
2025 2024 2023
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales 60.9 60.3 60.4
Gross profit 39.1 39.7 39.6
Selling, general and administrative expenses 20.7 18.7 19.3
Restructuring 0.1 0.2 0.1
Impairments 0.3 0.3 0.1
Income from continuing operations 18.0 20.5 20.1
Interest expense and deferred financing amortization, net 2.9 3.0 3.7
Net periodic pension benefit (other than service cost & curtailment) (0.2) (0.5) (0.3)
Other expense, net 0.2 - 0.1
Earnings from continuing operations before income taxes 15.1 18.0 16.6
Provision for income taxes 3.6 4.6 3.8
Net earnings from continuing operations 11.5 13.4 12.8
(Loss)/earnings from discontinued operations, net of tax (20.1) 0.2 (0.4)
Net (loss)/earnings (8.6) % 13.6 % 12.4 %
(1)The company's fiscal year ends on the Saturday nearest to December 31.
Fiscal Year Ended January 3, 2026 as Compared to December 28, 2024
Net Sales
Net sales in fiscal 2025 increased by $51.0 million, or 1.6%, to $3,201.2 million as compared to $3,150.2 million in fiscal 2024. Net sales increased by $107.3 million, or 3.4%, from the fiscal 2024 acquisitions of GBT GmbH Bakery, MaxMac, Emery Thompson, JC Ford, and Gorreri and the fiscal 2025 acquisitions of Frigomeccanica and Oka. Excluding acquisitions, net sales decreased $56.3 million, or 1.8%, from fiscal 2024. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars in fiscal 2025 increased net sales by approximately $18.7 million. Excluding the impact of foreign exchange and acquisitions, sales decreased 2.4% for the year, including a net sales decrease of 1.7% at the Commercial Foodservice Equipment Group and a net sales decrease of 4.5% at the Food Processing Equipment Group.
•Net sales of the Commercial Foodservice Equipment Group decreased by $29.4 million, or 1.2%, to $2,351.0 million in fiscal 2025, as compared to $2,380.4 million in fiscal 2024. Excluding the impact of the acquisition, net sales of the Commercial Foodservice Equipment Group decreased $35.7 million, or 1.5%, as compared to fiscal 2024. Excluding the impact of foreign exchange and the acquisition, net sales decreased $40.5 million, or 1.7%, at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales decrease of $24.0 million, or 1.4%, to $1,681.9 million, as compared to $1,705.9 million in fiscal 2024. Excluding the acquisition, the net decrease in
domestic sales was $30.1 million, or 1.8%. The decrease in domestic sales is related to slower market conditions particularly with lower chain customer store traffic and replacement demands. International sales decreased $5.4 million, or 0.8%, to $669.1 million, as compared to $674.5 million in the prior year. Excluding the impact of foreign exchange and the acquisition, the net sales decrease in international sales was $10.4 million, or 1.5%. The decrease in international sales is related to slow market conditions, primarily in the Latin American markets.
•Net sales of the Food Processing Equipment Group increased by $80.4 million, or 10.4%, to $850.2 million in fiscal 2025, as compared to $769.8 million in fiscal 2024. Net sales from the acquisitions of GBT GmbH Bakery, MaxMac, JC Ford, Gorreri, Frigomeccanica, and Oka accounted for an increase of $101.0 million during fiscal 2025. Excluding the impact of acquisitions, net sales of the Food Processing Equipment Group decreased $20.6 million, or 2.7%, as compared to fiscal 2024. Excluding the impact of foreign exchange and acquisitions, net sales decreased $34.5 million, or 4.5%, at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $30.0 million, or 6.7%, to $477.9 million, as compared to $447.9 million in fiscal 2024. This includes an increase of $41.1 million from recent acquisitions. Excluding acquisitions, the net decrease in domestic sales was $11.1 million, or 2.5%. The decrease in domestic sales is driven by decreased sales volumes of protein and bakery products. International sales increased $50.4 million, or 15.7%, to $372.3 million, as compared to $321.9 million in the prior year. This includes an increase of $59.9 million from the recent acquisitions and an increase of $13.9 million related to the favorable impact of exchange rates. Excluding the impact of foreign exchange and acquisitions, the net sales decrease in international sales was $23.4 million, or 7.3%. The decrease in international sales reflects decreased sales volumes of bakery and protein products in the European markets.
Gross Profit
Gross profit increased to $1,251.9 million in fiscal 2025 as compared to $1,251.8 million in fiscal 2024. The impact of foreign exchange rates increased gross profit by approximately $8.2 million. The gross margin rate was 39.1% in 2025 as compared to 39.7% in 2024, primarily related to product mix at the Food Processing Equipment Group and an adverse impact from tariffs.
•Gross profit at the Commercial Foodservice Equipment Group increased by $0.6 million, or 0.1%, to $944.1 million in fiscal 2025, as compared to $943.5 million in fiscal 2024. Excluding the acquisition, gross profit decreased by $3.4 million related to lower sales volume. The impact of foreign exchange rates increased gross profit by approximately $2.4 million. The gross margin rate increased to 40.2%, as compared to 39.6% in fiscal 2024. The gross margin rate, excluding the acquisition and the impact of foreign exchange, was 40.1%.
•Gross profit at the Food Processing Equipment Group increased by $3.5 million, or 1.1%, to $308.9 million in fiscal 2025, as compared to $305.4 million in fiscal 2024. Gross profit from the acquisitions of GBT GmbH Bakery, MaxMac, JC Ford, Gorreri, Frigomeccanica, and Oka increased gross profit by $30.4 million. Excluding acquisitions, gross profit decreased by $26.9 million due to lower sales volume and product mix. The impact of foreign exchange rates increased gross profit by approximately $5.8 million. The gross margin rate decreased to 36.3%, as compared to 39.7% in fiscal 2024 primarily related to product mix. The gross margin rate, excluding acquisitions and the impact of foreign exchange, was 37.1%.
Selling, General and Administrative Expenses
Combined selling, general and administrative expenses increased to $663.2 million in fiscal 2025, as compared to $590.1 million in fiscal 2024. As a percentage of net sales, selling, general, and administrative expenses were 20.7% in fiscal 2025, as compared to 18.7% in fiscal 2024.
Selling, general and administrative expenses reflect increased costs of $24.0 million associated with acquisitions, including $4.9 million of intangible amortization expense. Selling, general and administrative expenses reflect increases in strategic transaction costs of $19.8 million, combined compensation costs and share-based compensation of $12.5 million, advertising and trade show expenses of $9.2 million, commissions of $5.9 million, travel expenses of $3.2 million and professional fees of $2.1 million. This was partially offset by a decrease of $7.0 million related to intangible amortization expenses. Foreign exchange rates had an unfavorable impact of $3.1 million.
Restructuring Expenses
Restructuring expenses decreased $4.9 million to $3.3 million in fiscal 2025 from $8.2 million in fiscal 2024. Restructuring expenses in fiscal 2025 and fiscal 2024 related primarily to headcount reductions and facility consolidations within both segments.
Impairments
In fiscal 2025, the company recognized non-cash impairment of $10.6 million primarily associated with certain trademarks in the Commercial Foodservice Equipment Group and Food Processing Equipment Group in conjunction with diminution of values as we assessed recent market conditions and future business plans. In fiscal 2024, the company recognized non-cash
impairment of $10.5 million which consisted of $5.2 million impairment of certain trademarks within the Commercial Foodservice Equipment Group and an impairment charge of $5.3 million associated with the decline in recoverable value of an equity method investment. See Note 3(f) to the Consolidated Financial Statements for further information on the annual impairment testing.
Income from Continuing Operations
Income from continuing operations decreased $69.2 million to $574.9 million in fiscal 2025 from $644.1 million in fiscal 2024. Income from continuing operations as a percentage of net sales amounted to 18.0% in 2025 as compared to 20.5% in 2024. During fiscal 2025 and fiscal 2024, income from continuing operations included the impairment of intangible assets. Excluding the impairments, the decrease in operating income was primarily related to higher selling, general and administrative expenses.
Income from continuing operations in 2025 included $123.1 million of non-cash expenses, including $43.7 million of depreciation expense, $55.3 million of intangible amortization related to acquisitions, $10.6 million of impairments and $13.5 million of stock based compensation. This compares to $139.4 million of non-cash expenses in the prior year, including $39.8 million of depreciation expense, $57.2 million of intangible amortization related to acquisitions, $10.5 million of impairments and $31.9 million of stock based compensation costs.
Non-operating Expenses
Interest and deferred financing amortization costs were $93.8 in fiscal 2025, as compared to $93.4 million in fiscal 2024. Net periodic pension benefit decreased $8.6 million to $6.3 million in fiscal 2025, as compared to $14.9 million in fiscal 2024, related to the increase in discount rates used to calculate interest costs and a decrease in expected return on assets. Other expense was $5.1 million in fiscal 2025, as compared to $0.5 million in fiscal 2024 and consists mainly of foreign exchange gains and losses.
Income Taxes
A tax provision of $115.0 million, at an effective rate of 23.8%, was recorded during fiscal 2025, as compared to $145.1 million at an effective rate of 25.6%, in fiscal 2024. The effective tax rates in 2025 and 2024 were higher than the federal tax rate of 21% primarily due to state taxes and foreign tax rate differentials.
(Loss)/Earnings from Discontinued Operations, Net of Tax
Loss from discontinued operations, net of tax, was $645.0 million during fiscal 2025, as compared to earnings from discontinued operations, net of tax, of $7.5 million during fiscal 2024. The fiscal 2025 loss includes impairments of $709.1 million and a loss on classification as held for sale of $62.8 million, as compared to impairments of $28.2 million during fiscal 2024. See Note 12 to the Consolidated Financial Statements for further details.
Fiscal Year Ended December 28, 2024 as Compared to December 30, 2023
Net Sales
Net sales in fiscal 2024 decreased by $91.9 million, or 2.8%, to $3,150.2 million as compared to $3,242.1 million in fiscal 2023. Net sales increased by $27.5 million, or 0.8%, from the fiscal 2023 acquisitions of Flavor Burst, Blue Sparq, Filtration Automation and Terry and the fiscal 2024 acquisitions of GBT, MaxMac, Emery Thompson, JC Ford, and Gorreri. Excluding acquisitions, net sales decreased $119.4 million, or 3.7%, from fiscal 2023. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars in fiscal 2024 decreased net sales by approximately $3.1 million. Excluding the impact of foreign exchange and acquisitions, sales decreased 3.6% for the year, including a net sales decrease of 4.2% at the Commercial Foodservice Equipment Group and a net sales decrease of 1.5% at the Food Processing Equipment Group.
•Net sales of the Commercial Foodservice Equipment Group decreased by $104.9 million, or 4.2%, to $2,380.4 million in fiscal 2024, as compared to $2,485.3 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 $107.7 million, or 4.3%, as compared to fiscal 2023. Excluding the impact of foreign exchange and acquisitions, net sales decreased $104.8 million, or 4.2%, at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales decrease of $117.1 million, or 6.4%, to $1,705.9 million, as compared to $1,823.0 million in fiscal 2023. This includes an increase of $2.7 million from recent acquisitions. Excluding acquisitions, the net decrease in domestic sales was $119.8 million, or 6.6%. The decrease in domestic sales is related to slow market conditions. International sales increased $12.2 million, or 1.8%, to $674.5 million, as compared to $662.3 million in the prior year. This includes an increase of $0.1 million from the recent acquisitions and a decrease of $2.9 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 $15.0 million, or 2.3%. 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 $13.0 million, or 1.7%, to $769.8 million in fiscal 2024, as compared to $756.8 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 $11.7 million, or 1.5%, as compared to fiscal 2023. Excluding the impact of foreign exchange and acquisitions, net sales decreased $11.5 million, or 1.5%, at the Food Processing Equipment Group. Domestically, the company realized a sales decrease of $36.8 million, or 7.6%, to $447.9 million, as compared to $484.7 million in fiscal 2023. This includes an increase of $7.3 million from recent acquisitions. Excluding acquisitions, the net decrease in domestic sales was $44.1 million, or 9.1%. The decrease in domestic sales is driven primarily by lower sales volumes of protein products. International sales increased $49.9 million, or 18.3%, to $322.0 million, as compared to $272.1 million in the prior year. This includes an increase of $17.4 million from the recent acquisitions and a decrease of $0.2 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 $32.7 million, or 12.0%. The increase in international sales reflects growth driven primarily by increased sales volumes of bakery and protein products in the European markets.
Gross Profit
Gross profit decreased to $1,251.8 million in fiscal 2024 as compared to $1,284.1 million in fiscal 2023, primarily driven by lower sales volumes at the Commercial Foodservice Equipment Group. The impact of foreign exchange rates decreased gross profit by approximately $0.8 million. The gross margin rate was 39.7% in 2024 as compared to 39.6% in 2023.
•Gross profit at the Commercial Foodservice Equipment Group decreased by $53.1 million or 5.3%, to $943.5 million in fiscal 2024, as compared to $996.6 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 $54.6 million related to lower sales volume. The impact of foreign exchange rates decreased gross profit by approximately $0.7 million. The gross margin rate decreased 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 $17.1 million, or 5.9%, to $305.4 million in fiscal 2024, as compared to $288.3 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 $7.4 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 39.7%, 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 39.7%.
Selling, General and Administrative Expenses
Combined selling, general and administrative expenses decreased to $590.1 million in fiscal 2024, as compared to $624.9 million in fiscal 2023. As a percentage of net sales, selling, general, and administrative expenses were 18.7% in fiscal 2024, as compared to 19.3% in fiscal 2023.
Selling, general and administrative expenses reflect increased costs of $7.8 million associated with acquisitions, including $1.5 million of intangible amortization expense. Selling, general and administrative expenses decreased $19.8 million related to combined compensation costs and share-based compensation, $12.5 million in professional fees, $10.3 million related to intangible amortization expense and $4.0 million in lower commissions. Foreign exchange rates had a favorable impact of $0.5 million.
Restructuring Expenses
Restructuring expenses decreased $3.5 million to $8.2 million in fiscal 2024 from $4.7 million in fiscal 2023. Restructuring expenses in fiscal 2024 related primarily to headcount reductions and facility consolidations within both segments. Restructuring expenses in fiscal 2023 related primarily to headcount reductions and facility consolidations within the Commercial Foodservice Equipment Group.
Impairments
In fiscal 2024, the company recognized non-cash impairment of $5.2 million primarily associated with several trademarks 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 $5.3 million associated with the decline in recoverable value of an equity method investment. In fiscal 2023, the company recognized non-cash impairment of $2.0 million primarily associated with several trademarks in the Commercial Foodservice 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 Continuing Operations
Income from continuing operations decreased $8.3 million to $644.1 million in fiscal 2024 from $652.4 million in fiscal 2023. Income from continuing operations as a percentage of net sales amounted to 20.4% in 2024 as compared to 20.1% in 2023. During fiscal 2024 and fiscal 2023, income from continuing operations included the impairment of intangible assets. Excluding the impairments, the decrease in operating income was primarily related to lower sales volume.
Income from continuing operations in 2024 included $139.4 million of non-cash expenses, including $39.8 million of depreciation expense, $57.2 million of intangible amortization related to acquisitions, $10.5 million of impairments and $31.9 million of stock based compensation. This compares to $150 million of non-cash expenses in the prior year, including $36.8 million of depreciation expense, $66.0 million of intangible amortization related to acquisitions, $2.0 million of impairments and $45.2 million of stock based compensation costs.
Non-operating Expenses
Interest and deferred financing amortization costs were $93.4 million in fiscal 2024, as compared to $121.1 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 $9.0 million in fiscal 2023, related to a decrease in discount rates used to calculate interest costs and an increase in expected return on assets as a result of the higher assets value. Other expense was $0.5 million in fiscal 2024, as compared to $4.3 million in fiscal 2023 and consists mainly of foreign exchange gains and losses.
Income Taxes
A tax provision of $145.1 million, at an effective rate of 25.6%, was recorded during fiscal 2024, as compared to $123.1 million at an effective rate of 23.0%, in fiscal 2023. 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.
Earnings/(Loss) from Discontinued Operations, Net of Tax
Earnings from discontinued operations, net of tax, were $7.5 million during fiscal 2024, as compared to a loss from discontinued operations, net of tax, of $12.1 million during fiscal 2023. Fiscal 2024 includes impairments of $28.2 million, as compared to impairments of $76.1 million during fiscal 2023. See Note 12 to the Consolidated Financial Statements for further details.
Financial Condition and Liquidity
Total cash and cash equivalents decreased by $416.6 million to $222.2 million at January 3, 2026 from $638.8 million at December 28, 2024. Total debt amounted to $2.2 billion and $2.4 billion at January 3, 2026 and December 28, 2024.
At January 3, 2026, 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.
Operating Activities
Net cash provided by operating activities - continuing operations after changes in assets and liabilities amounted to $564.6 million as compared to $614.5 million in the prior year.
During fiscal 2025, working capital changes contributed to operating cash flows primarily driven by an increase in accounts payable of $18.1 million, offset by an increase in accounts receivable of $14.5 million and prepaid expenses. including impacts from the timing of payments and status of over-time revenue contracts.
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 2025, net cash used for investing activities - continuing operations amounted to $103.8 million. Cash used to fund acquisitions amounted to $32.0 million. Additionally, $70.7 million was expended, primarily for upgrades of production equipment and manufacturing facilities.
Financing Activities
Net cash flows used for financing activities amounted to $970.9 million in 2025. The company's borrowing activities during 2025 included $1.1 billion of net proceeds under the Credit Facility, $607.3 million of net repayments under the Credit Facility and $744.5 million of payments of principal of convertible notes. On August 19, 2025, the company and its lenders entered into
an agreement to amend the Credit Facility which, among other things, extended the maturity date of the Credit Facility from October 21, 2026 to April 28, 2028.
Additionally, the company repurchased $723.6 million of Middleby common shares during 2025. This was comprised of $14.0 million to repurchase 83,889 shares of Middleby common stock that were surrendered to the company for withholding taxes related to restricted stock vestings and $709.6 million used to repurchase 4,911,050 shares of its common stock under a repurchase program.
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 2, 3, 5 and 7 to the Consolidated Financial Statements for further information.
Related Party Transactions
From December 29, 2024, 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. 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, 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 for equipment and services based on expected cost to manufacture the good or complete the service plus an appropriate profit margin. The estimated standalone selling price of aftermarket parts is based on observable prices.
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.
Control may pass to the customer over time or at a point in time. In general, the Commercial Foodservice Equipment Group recognizes 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. Equipment that is highly customized and for which we have a contractual, enforceable right to collect payment upon customer cancellation for performance completed to date qualifies for over time revenue recognition. With control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Installation services provided in connection with the delivery of the equipment are also generally recognized as those services are rendered. We generally use the cost-to-cost input method of progress for our contracts because it best depicts the transfer of control to the customer that occurs as we incur costs.
Under the cost-to-cost input method, the extent of progress towards completion is measured based on the proportion of direct labor hours incurred to date to the total estimated direct labor hours at completion of the performance obligation. The selection
of the method to measure progress towards completion requires judgment. 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. Revenue generated from standard equipment, contracts without an enforceable right to payment for performance completed to date, as well as aftermarket parts, are recognized at the point in time control transfers to the customer, which is typically based on contractual shipping terms.
Contract revenues are determined by negotiated contract prices, modified by our assumptions regarding contract modifications, which are common in the performance of our contracts. Contracts modified typically result from changes in scope, specifications, design, performance, or period of completion. In most cases, contract modifications are for services that are not distinct, and, therefore, are accounted for as part of the existing contract.
Contract estimates are based on various assumptions to project the outcome of future events. These assumptions are dependent upon the accuracy of a variety of estimates, including engineering progress, achievement of milestones, labor productivity, and cost estimates. Due to uncertainties inherent in the estimation process, it is possible that actual completion costs may vary from estimates. Contract estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes based on a performance obligation's percentage of completion. If estimated total costs on contracts indicate a loss or reduction to the percentage of total contract revenues recognized to date, these losses or reductions are recognized in the period in which the revisions are known. The company has not recognized material favorable or unfavorable changes in estimates related to its contracts with customers in fiscal 2025, 2024, or 2023.
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, and finished goods. 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.
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: the Commercial Foodservice Equipment Group and the Food Processing 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. Additionally, the company validates the estimates of fair
value under the income approach by comparing the fair value estimate using a market approach. A market approach estimates fair value by applying cash flow multiples to the reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. The company considers the implied control premium and conclude whether it is reasonable based on other recent market transactions.
Based on the qualitative assessment as of September 28, 2025, 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 or trade name; 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 28, 2025, 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 and trade name assets, significant assumptions used in our relief-from-royalty model included revenue growth rates, assumed royalty rates and the discount rates, 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.
•In determining royalty rates for the valuation of our trademarks and trade names, we considered factors that affect the assumed royalty rates that would hypothetically be paid for the use of the trademarks and trade names. The most significant factors in determining the assumed royalty rates include the overall role and importance of the trademarks and trade names 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 and trade names, 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 and trade names tested was approximately $23.8 million, including the impaired trademarks. As a result of the quantitative testing the company recognized $10.6 million of impairment charges primarily associated with certain trademarks within the Commercial Foodservice Equipment Group and Food Processing Equipment Group. For further details associated with the company's trademark and trade name impairment testing, see Note 3(f) to the Consolidated Financial Statements. 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.
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 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.
The Middleby Corporation published this content on March 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 04, 2026 at 22:07 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]