MIDD - Earnings call transcript Q3 2024 | The Middleby Corporation

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Operator

Good day, and welcome to the Third Quarter 2024 Middleby Corporation Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Tim FitzGerald, CEO. Please go ahead.

Timothy FitzGerald

Good morning. us our joining call. quarter for you today third on earnings Thank

website. we are Investor on our there please Relations to of As note call slides begin, accompany the page the

than in Third restaurant in expected, segment quarter operators, lower and food resulting already traffic greater a reacceleration restaurant be months costs proved more in as particularly our recent restaurant Commercial to closures. for Foodservice of high investment a delayed challenging further pressured

the for picture headwinds conditions participate. macroeconomic we in businesses, more demand our Although which strong across favorable remains foodservice return and faced as expected the we pent-up with multiyear recoveries industries

While we margin comparison to we initiatives as posted profitability faced strong the margins second expansion our in quarter. businesses, revenue reported in quarter, across to we hold the continued take our declines and

are of to pleased operating roughly flow, with solid reported $XXX record cash very a XX% XXXX. cash another million, also We of flow year-to-date ahead quarter in have

Given leverage, business the ago over strong cash end rapidly Xx a quarter. at has of to from which reduced year just the our X.Xx have we third declined the flows generated by our

Our continue strategic sheet make And opportunities arise. as investments is we the on us positioning strong, they capitalize balance to in us initiatives and market operational critical for to allowing future.

months. of new for XXXX, cost and food improving At customers' business, many execution the through declined at third improve which the for time, the quarter. At saw increases These customers levels store we have which equipment reacceleration in we ordering against progressed anticipated slowed reported throughout quarter. dropped plans our our Foodservice improvement sector a to by our and saw Commercial restaurant factors across half, in ordering Restaurant gradual as business throughout the of X.X% upgrades off openings. first costs, in of was recent same QX, been traffic, the

expected unit headwinds started for as when from growth estimated an originally we economic compared X,XXX of have the industry for XXXX the restaurant closures to X,XXX Overall, the year. resulted in

delayed challenging, longer industry largely with are foodservice conditions while the in changed. expected business and is over not continued unit plans, locations, years. over but the the growth net have Although still next return down XXXX to XXX,XXX And our for chain forecasted with additions X customers term,

on highlighted our launched opportunities many a a building number product to have with solutions of industry-leading record across As new tied we calls, yet realized. to categories, of be pipeline customers of all

expect this As be pipeline we conditions improve, realized. to

efficiencies, trends reduce service. to well innovations are labor drive to on food address to enhance with industry costs, and speed restaurant positioned We save support of the need

Additionally, we in have are made significant category are and the for multibillion investments targeted In we segment. Middleby. entry momentum our into as early the we further in just new product chapters and underpenetrated categories and grow expanding our and into particular, through this dollar offerings ice acquisition into development, beverage large realizing penetrate

in historic our both business, residential to down starts are year, decline multi-decade residential QX to we to lows. levels profitability. top today, impact in on our XX% continuing significant challenged This against the home XX% remodels. is our housing that and with improve At Existing brands volumes Unit on a comparison have across the pre-COVID and our line to levels. business sales originally market continued to new home of low anticipated the home sales, during existing further remains normalized

in levels significant our a The to expansion recovery back back norms. to will pre-COVID result profitability expected volume historic

supporting our our profitability actively we capabilities to making While targets. and are that long-term achieve quality, efforts manufacturing our efficiencies operationally, our in are investments benefiting

is our certain driven demand. business, we with by which outdoor areas, such part these signs While large current recovery navigate conditions, market of in seen replacement in initial as we've growth

follow to lowering home new has indoor rates multiyear which begins longer-term we to business, build a recovery of exposure expect a leading areas of hold, recovery. to take the into premium as and interest greater Our remodels,

occurs offerings brand as residential this continues positioned traffic to as benefit designs. our we with at and array ever than leading dealer unique with and of grow are portfolio, showrooms than The launches partners. engage to many We ever our kitchen better recovery more and new wide designers product

reaching audience, are a We to for expanded this new will benefit and provide and years come. the

opportunities the higher while In the rates Processing Food inconsistent, they on interest recent while cautiously larger quarters, monitor business, as measuring customers remains food our of in impact conversion of into proceeded have costs, projects. orders also

of throughput, our continues is for a remain to labor and There to throughout year. minimize pipeline waste. projects the active and However, increase reduce solutions the demand continued strong has food grown

result, pipeline occurring As of are more the for constructive and decline for with in XXXX food a see conversion as backdrop processors orders becoming a conditions greater we rates certain. market interest expected

are as continue customers leading integrated line resonating, for and their positioned businesses This with partner execute of our We and in need upon processors. to to solutions become and operations. we for they strategy their address strategy is the our full to best-in-class provider bakery the evolve and protein automation

solutions, continuing grow snack as As to expanding addressable our for foods, we into continued new also and continue best-in-class we poultry and market future our are opportunities. such expand growth to providing applications

our focus competitive expanding While upon business flow, cash strategic we of and the of market initiatives, industry-leading our businesses. our our we execution each on navigate to at near-term profitability conditions, X building growing foodservice advantage while continue our

the strategic spotlight innovations, James? Now providing service to efficiencies some to our recent some call cost new product investments tangible exciting over and our savings operational of I'll pass customers. also in James the and of to highlight

James K. Pool

Thank you, Tim.

was quarter, my of producing an into known best Two for the customer their commercial Nieco one brands service. of recognize Vendor broiler. automated by King, broiler get change-driven innovation outstanding nights awarded flame ago, Year latest to for I for our Before I'd and their Nieco, the discussion like Burger

typical reduced $X,XXX year maintenance a approximately saved cost. energy Great boiler a Nieco, Our team BK job. on Congratulations operator and

competitive the referencing frame automated it slides years. XX broilers features broiler in past can continues flame discussion the my benchmark earnings to for next-generation energy-saving States. you faster as for operator Nieco's models. mentioned, the qualified energy also has of It high-efficiency find Tim to allows feature Nieco for XX% gas than burners and down broiler the deck. rebates As shut features across the XX% These an United be broiler The adds times. been the broiler that meaningful the nonpeak during is

Lastly, tied the addresses Marco theme the discuss it stick faces most milk Open commercial ready IoT utilizes sure a of to another to Middleby most service, and surprised that the Nieco hear and Nieco innovation going you up significant milk microfoaming. set Touch otherwise from of Controller. broiler with brand. service MilkPal automation, product XX% is Since I'm time Kitchen I'm as to The challenge that One - and this, every coffee are around latte known speed frothing, Barista Marco, of impacts milk. beverage example, to is foodservice the a shop for

XX% dispense one wasted leads shops each addresses milk foam, for major syndrome; XX example. carpal hot of always for and Additionally, milk every c-stores, dispense. finally, handling The can locations. cleaning by The the hot food milk and tunnel cold is MilkPal these to milk, well pal accompaniments pal through coffee and restaurants milk milk shop inconsistent foam, and business for jugs as and/or overproduction must is coffee The also concern. is of suited milk Frequent product Marco challenges to up as automating of quality. safety a unique cold is milk industry and such

the a machine more precise sit The system control. quality without with cold It microphone steam cold. a of accompaniment or also it consistent fast-growing given microfoam MVP in Synesso designed waste semi-automated so using creamier more semi-automatic a their flavorful beverage, traditional the espresso and MilkPal for such its with or consumer art to is any any Barista be near portion market. of machine MilkPal without hot a thus highest espresso produces also The automating X a espresso dispenses single the next steam takes push Hydra art, or whether to is our any micro button, accompaniment beverage foaming the as perfect each on. richer,

this the the required consistency. utilizes clean-in-place MilkPal systems, system. technologies, the dispensers, system clean dispensing to labor quality rent daily -- reducing milk drink also to drink system to other and unlike the Middleby's improving between itself plumbed, Lastly, It allows thus allows

reasons of our one to touch to one like back I'd presents Vendor on the opportunities won the Nieco of Service in circle why of largest industry. Now customer service. Year the

MIK. this, Since of thousands major combat opening we facility As our the QX pandemic, lost Innovations state-of-the-art has of brands. commercial qualified at during we a Middleby built in technicians the training of AKA's, become Kitchens, focus our facility training year, this service the to a

service their our These partners technicians highest and Middleby been open, we've trained technicians technicians franchisees own short from certified our our servicing come they authorized time XX have has chain the on large over service brand. as technology of operators In it and XXX products today. and

a of in organic speed as service field rate on network highly of is branded sales an our tools Middleby of and industry-leading Our first-time of best defense focus trained will service technicians line business. ultimately technicians. sales fixed These the one first our become creating Advantage and and drives replacement

in this look products products your to or Please to new North February and like on American displays that be will XXth show mention embedded Middleby and would end we Food a the other forward there. NAFEM, XX highlighting, I on automation and seeing Equipment quick all robotic Georgia. put you Manufacturers these with in calendar, digital, through Atlanta,

over and you, Bryan. to Thank you,

Bryan Mittelman

Middleby. Thanks, This James, everyone. CFO Bryan here Mittelman, and at good is morning,

results for you. I'll in a an go of bit perspective our all outlook through of financial little

X% from year. QX we generated a X% For third the quarter, of the sequentially versus $XXX which and decrease million, is a revenue prior decrease

which a QX. Our at from adjusted margin basis million was $XXX up was points XX.X%, XX of EBITDA

our challenging discuss top our and operational to basis, on that our market of will and impacts. us I acquisitions margin meaning cost on conditions excluding spite values products, profitability control In foreign organic excellence allowed sequentially. innovative All impacted any the exchange improve focus an the are line,

organically share per margin earnings prior $X.XX. down were the and XX.X%. Commercial GAAP the EBITDA EPS and were revenues was adjusted our versus year, nearly X% QX $X.XX, Foodservice was adjusted

trends facing -- we tough revenues thus considerably through progressed and While we quarter. and weakened the are as revenues comps, order

Given ability we pleased with are to the top line our margins. generally challenge, preserve

revenues X% year. $XXX million, prior were over nearly Processing, up the the Food In for quarter nearly

over orders were saw and some out. pushed weaken also quarter We projects the

XX for nearly we over over basis Our In from expand delivered decline $XXX were margin adjusted increase to QX, to over flows points adjusted an QX. of an nearly X% residential, which strong able XXXX, healthy up cash million EBITDA saw organic yet remained versus at We of at X.X% EBITDA QX. the XX%. revenue we margin is XX.X%, operating

last and exceeds $XXX months trailing XX a XX-month the revenue Operating basis, over our flows prior when yield past XXX%. excluding free cash year $XXX net for a of on million impairment are Also cash on the the over income, conversion charge, X million nearly flow XX%. with on over quarters, corresponding is

ratio leverage now to total is down Our X.Xx.

generation strong flow point Cash a remains us. for clearly

free expect expect QX, quarter typical that exceed our will of we be flow relatively XXXX. with year The to to our of flow look conditions the that of over as I XXXX As will results, given our should in growth thoughts, exceed strongest facing, amount is we to one QX. of cash that free the I from cautious. year. generate be near-term QX. Continuing Nonetheless, we full believe Also, should tone we cash are still see some sequential QX outlook my

offering sequential billion. company, This QX to This outlook risk, similar $X prior is on of be quarter likely margins again best perspective the each and to year. and dollars it with would and of revenue some to could total to segments. from X% year prior step would the do I not EBITDA and QX be but expect be close represent Starting year flat achievable. up the to achieve is our growth levels. Pivoting would commercial. without the also For

QX up to conditions that revenues For to customers' the from is macroeconomic would anticipate QX, impacting rates. require our for growth, activity There flat given slight to current ordering we be activity. some inflect but potential customer approximately

basis. for represents revenues could of processing. segment well which in spite sequential relatively food $XXX strong about weaker-than-expected the first million position. on growth growth In to year-over-year into ever, mid-single-digit as time the the exceed on QX a this QX, high of teens a Moving as remains

In up be single residential, sequentially we level. and revenues the around year high digits anticipate prior could be

we've to managing creating are margins. challenges, preserve conditions ferociously market or been our While costs expand revenue

the expect segment, at least levels be QX margins For most food I to QX likely each achieving at with expansion. EBITDA sequential processing

and as solid and and expectation we longer-term suboptimal deliver of margins proudly expansion enthusiasm margin seen for market our operational excellence can cash strong place. remain focus in Our the revenue clearly be conditions, In on growth flows. clearly face

Our customer engagement increasing solutions. remains strong and adoption of our we expect

multiyear Our outlook positive. remains

with results. execution, Our operational improved in will innovations, power along our strength

forward looking to growth in XXXX. We returning to are

questions. we take you, your now will and Thank

Operator

Instructions]. [Operator

The from Boroditsky first question comes Jefferies. from Saree

Saree Boroditsky

quarter. Just starting it with weaker expected in came than the commercial. in Obviously,

Could and the then on highlighted you're the about see need challenges quarter? the talk seeing to in and growth in You to pickup you this you what segment a you trends have some maybe through restaurant visibility order space. overall went just comment in as just

Timothy FitzGerald

that half Yes. with But -- of of of seemed of mentioned engines as new we some I the orders I whether of time a weaken We the and thought they trends. through. good, came institutional or The seen lot year that the projects the both that they coming of their We I a kind order not as gave think us have as happen. stores, kind through, the dealers mean, their and went kind it's just quarter, upgrades, and chains the some were we reiterated into had to started, customers, pretty and plans lot of did outlook. well the just back growth as projects, for spent

out I that restaurant facing. market of the I the pressures backdrop but been is because think of are a there, execution think tough, the the that they are lot I the of and So has of some and operators think still

have they're kind that that's those large XXXX. do some nonoperating the opening quarter. think resurface there. into some is of The about go the of expanding, lot over out So will longer still we larger well that the as kind we they with They I think I pick that pretty plans a engage chains saw for casual underbrush have. some stores, believe store with pipeline both that's term, there clearing the and But We say, as I'll certainly what as targets fast talking through the out up are and chains. But still customers. kind and that of of, reassessing of maybe of we

Steve Spittle

primarily reiterated mean I from new have Saree, the we're quarter the new probably still store Yes. seeing I of some customers also though fourth the really of vast chain push the of from total our stores even plan. quarter, add, majority would openings the third sticking this to and obviously, number

'XX. catch-up open stores new the playing 'XX So for for stores didn't they in

right more pushout of the their stores few pipeline. actually reduced that very that referenced. their Tim there's So number been in It's just to the

Saree Boroditsky

margins then in came than despite switching better maybe sales. I And residential. believe, The lower expectations, to the

as do margin see through So what we how you think about margin go there you an incremental perspective? improvement XXXX? from should And

Timothy FitzGerald

just I think we were where up, the to big pre-COVID. step back frankly, gets to

on to structurally you lower mentioned to of I business, at operating that. it the were are legacy are opening cetera, about that for way, new Fundamentally, in in comments, today. we invest significantly much indoor quality, they the at terms and As if et than want levels we our continue those is stronger businesses pre-COVID products, think

we just in margins a the we gets pre-COVID, will to us the foresee is were meaningful getting something So which closer step-up back happen. to That that XX%. where

of happen is bodes it is So come rates but that's market a now, housing knows, very as big the one that's not to everybody going difficult to certainly timing down going obviously to hold forever, starting well. interest right question,

But as had that laid getting a top volumes new I just top driver. normalized to say us which products kind will get longer-term big investments of mean, we've lay what platform on of think would I margins that, of kind to in targets. back the -- normalized margin out significant or I at of But we've to that, kind going tailwind. have we're on that some the a point, So of is and

Operator

comes The next from from Dobre Baird. question Mig

Mircea Dobre

on clear to commercial guys seeing the And a you into start what in seasonality, of channel I these as diverges that what as mean, year-end. 'XX. but normal year-end has might into food where I normal store really percentage for fourth the you're progress that pushouts about increases And of your restocking mean see I do. new there from want implied several flat inventory kind I'm additions, quarter typically, implies as wondering that and fact for lies distributors, that with well. been you're the your outlook demand kind do bit point that here revenues, some the far how right?

Steve Spittle

It's Yes. good Steve. Very question.

then the do you of think I development, So you And would bump. the that business, busiest both year. fourth referencing as see historically, dealer you're quarter, you're the correct. and distributor would quarter The part of fourth actually be more quarter, chain normally historically, see on our our fourth historically in quarter

think last in obviously you've a I this patterns. seen years, change over ordering the -- is several

I distributors have for for a a see different that will less They're time. they couple you historical long not think carrying than inventory of bump reasons. from

but we would bring carrying has are excess years, it past long willing of in a well certainly inventory inventory rates, higher I the than primarily to think as say, they're cost historical interest driven the channel, for in the by is time. in less inventory they been higher also

are better times place. in a lead much also Our

So they certainly more time. in order can real much

So of actually as I end a the they're a bit gap close and little the order time nuance trying well. the also period to say user between product. customer it's needs that that

with a planned price year. the parts this have several time Historically, increases, January January years frequent cadence one increases. the for X. been price time will be of don't X different common a to We've We going during last over have more

this there's year-end, historical bump makes I bringing at that sense. the distributors from time expect some or nuances in traditional inventory if just think different don't So where I

Mircea Dobre

about, talked into of destocking Does that that XXXX? sort the headwinds or does extend you kind of extend

Steve Spittle

expect is to start be is, as interest back hopefully, dealers more most you say, could Mig, levels. I come see pre-COVID do nuance to behind the the inventory I destocking, us, part open down, rates bringing in I think that for more to, would I think

So I behind think us. destocking is

I to think, Again, as will going of inventory as for cost carrying be think a and little bit interest the unfold dealers rates year. wait it's I that, stock how see think year. tailwind, next to a So is levels next of about

into it's starting ramp you I of next So up year inventory start see middle an think back probably standpoint. probably to dealers part the until from to

Mircea Dobre

Okay.

are in not there's that this you And for costs host wages How the environment that freight well, materials, either in have I obviously fact kind that 'XX. think surprising next price There's I other I seen increase find initiative as is to restructuring that we can are we're mentioned be of today, one in of bit is You of cost the formal investors a a inflation. where that the segment. as you items do about a but of or embedded think haven't little whole some sort they going do that consider that we that given guess the presume things a year? savings some about

Steve Spittle

for not That -- pricing 'XX. should -- in where so I take increase, a So in January clarified. mean referencing, have does appropriate that's X not will we having we're not hey, pricing

was but of to when I'll I play last back chain we substantial pretty standpoint, from catch -- going really price the a the several has last taking good of years company. increases over pricing calls, been mean initiatives mentioned the pricing, around several I spiking think in I we've think been the mix in I inflation a very most up. hit over several second, to the I've strategic supply thoughtfulness side on years, think one

about that make sure as And think to whether going there ebb last catch thoughtful is late did staying specific costs it very the top of container transportation, on whether pockets remain in products even just whether still when specific pricing flow, coasts, see issues but that. I have the inflation, on, months there taken continue it's labor, as in the port now several in components, and on are we we're of were We do up, you it. to

supply things chain of Middleby really chain the is from think supply best our acts again, thinks product happened all across our one has platforms. a that before, the I by standpoint, of X I as think and I more said is of COVID

And more year. so or Middleby logistics, whether you I the actually and thinking on continues next it's savings behind do whether steel it is as see in the on that scenes, on think I think it's materials,

be taking So would it guess hit I it's feel next I like afraid a pricing. mindful to warranted trying from year of about We're thoughtful being of if backdrop. we're sides, say both not pricing certainly to we continuing competitive

leverage from to continue chain the think, and suppliers I our for partners. also, logistics supply Middleby While savings

Bryan Mittelman

Bryan. this Mig, is

things. me the Let of address side restructuring

of say been of restructuring the have actions added the be have more reduced regarding manageable We put impact But a we have types more hundreds the segments from discretionary year of in may over I'll expenses. would course And the we of it's the had consistently that. throughout we've people or actions headcount of actually call of in by what terms -- lot year. taking which in

the seeing results I'll been strong are that you expansion given margins to, line in top right, And our even some able we've the say, challenges. maintained margins, in of have

commercial So has restructuring and the the reactive conditions, that been more again, not let's and in unfortunately. But is has market on to probably of it's phase, over past into and either. residential from actions years, processing earlier more food we're Again, course expanded say. been active leading X the consistent really the exempt

Timothy FitzGerald

those $XX were order million. on about Mig, of

have always accelerating that the But that we didn't of the we will But started we second belt, that something -- in but was of to tightening which get a the some quarter. put higher it profit of a in manage that's to current kind certainly So lot of also the structural to do some we place announce, long-term in lot that of environment. margins. is initiatives

is volume some will which expanding when returns margins, strong to us turn into allowing of deliver margins. So what's that the

the where factories. in as of includes in investments equipment we're capital some efficiencies investments in you've consolidating that And seen factories manufacturing the that as and driving well new we're

margins things expand embedded longer-term So basis, to kind maintain on I that's think of us and a in them. lot allowing all a that's of

Mircea Dobre

X% pertains see we this quarter. final SG&A one next how line in decline, that to item, volumes to room to line this as work And remain to about at comment the all It almost particularly may, notable you quarter? you fourth I think year, more there item, as Can is if on relatively continue question. If the weak?

Bryan Mittelman

Yes.

again especially talked years. compensation think as frugal recovers, headcount as shifts pretty So have of dramatic we've incentive results relatively about we've is that don't will extent, that to just consistent cost we've we -- be couple relating I QX down. And start costs SG&A. know we're general, laid over lower how a past but I uptick, been with to our across as it likely to out. organization, control year I'd I compensation certainly certain relates to have overall incentive There expect tend and in the -- the I this been in QX we again, be shake entire business that Certainly, with. compensation We expect taking could actions. mentioned actively and to professional fees pretty again, the addressing out our again, costs an mean, been

Operator

of from question Genuity. Brian next comes The Canaccord McNamara

Brian McNamara

Has just that you sales. return year strength? what next some confidence change dead hate what restaurant pushed double-digit to be drill this percent closures. of in you out? down curious the And gives are driving independents? believe the but dynamic growth to I here, Is concepts I openings like will I'm unit on it segment contained low out being on market horse could commercial they're on if of

Timothy FitzGerald

Yes.

restaurant that as the chain set our which probably there's as longer-term term that we're things well look goals are them lot both I plans with in they're of conversations of X it's we they've I near mean expansion the their many what that to. think out, a and customers public. having certainly, are,

The other industry forecast. is

for as forecasts but the chains. there the have chains, than harder the of of side, happened independent some So quick-serve lot that mentioned, been has are bit happened there on certainly, also the Certainly, more you some with dine out a closures, a chains hit the casual industry. of

getting of you've lot concepts a of think other is there what's the locations reopen we those some there closed perhaps less So happening that got in and are -- spots. either healthy

the of stronger And table from better for expand base. the resets to that a kind chains

-- the with chain so our getting really, it's engaged their So we're plans. the that customers comments forecast from industry we're and

Steve Spittle

could just time know growth add. the openings, Brian, of a QSRs and if and new with I I our of fast on, the focusing casual spend primarily that's big lot we obviously, segments. store a part

markets. think openings as on the aside keep for saying continuing still up for store to moment, remain, think the we new of I that I a more more to into to face us and next the international year, restaurants economics just the expand positive still which opening and put challenges looking they're are restaurants on franchisees, all all bring they about unit

Again, your that via be labor, can be can costs utility service consistency, take pick.

that. I think James of highlighting example the Nieco broiler great is a

itself of look for costs, actually maintenance a a the more period in costs. look you when time when such but expensive you pays short the piece at Here's it's equipment it utility of at

part of is There openings, new what think can I of so facing I that lot store a impact. customers call we're are think every a the day. not restaurant And but on fundamentals focusing on really this the our

that facing. challenges positively, So those they're

solve so think be positioned them store kind ebb So we're no years. new flow, continue why we to they do I couple opening those positive help that's the about another happens of to to and matter still have of challenges, from so. reason and next what a well

Brian McNamara

and taken franchisees the into pricing We've have volumes down for of I in that's factoring years? of heard then opine that it commercial, you couple too Great. don't in X out experiencing. assume safe a segment. versus on the bigger of some players break to that in market weakness increase you're think been price wondering last the the secondly, the And we're is Jan of lack materially if much some But just some pricing volumes have

Bryan Mittelman

in is I'll largely I with volume this revenue the fair past here. muted, been assume Bryan think Mittelman seeing look have say, what it's year right? over, Brian, to -- actions Especially aligning more Especially pricing you're as overall. we that Yes. is line the where

Steve Spittle

I I we exit of And over would number years, that Steve mindful this have that, did reminder the about Brian, and part a -- also that process. we as just last been several our mix. tough-to-build very again. low-margin in SKUs a would is thoughtful of

So volume there referencing, out also very not company. are for margins the I overall we be time to positively you're thoughtful we're the getting use that to products low-margin contributing yes, of obviously think challenges about do the that but

you're still the of this So X did of There that years. that or referencing, to we exit products I there is want that. is last element a dynamic don't lose X sight but also over

Operator

The Hammond next question from from KeyBanc. comes Jeff

Jeffrey Hammond

on delay, opening store catch-up this just the to this they deferral of versus uncertainty freeze I'm back delays kind XXXX? thesis what Just don't trying right sense to kind how you a of the pushing just better keep and of versus much gives of kind in permitting confidence get just the is of

Timothy FitzGerald

hard you. think I with it's ball have honest crystal to be to the

think right for been they've I pushing to the a while.

think and I one and the some thing. at upgrade. replace need they really trigger So that's point, pull to just And

for been a on So the of that dynamic. I Like a right? is lot that's looking think these one at it, time. solutions just touching long Steve, -- they've

talk customers our about of regularly. Some it

that with difficulty terms lot into to and at as going things longer, issues rates looking they're uncertainty we're have fundamental that stuff. with you dealing moving the also interest permits, in they But I some traffic, hey, have they're comments just on this through I dynamic think getting lead to, do the periods move take things getting their operations -- a they're transform where of to getting that do extended. food land which mean of kind of call of forward I the like go places, on length costs different and that

to lot our to produce and that that A quarter. concerns to coming be had their of going come of we're a to us keep their third up customers with enough on We pressure into able demand. actually lot

move they going their in need pull some ultimately, So they things really I forward these of to the think on of trigger to to business. are -- kind

think move going to next we as showing we that So is into up start year.

Jeffrey Hammond

couple then And balance flow Okay. items. a cash of sheet

the opportunity into back talk your come that be to just capital what of maybe free, of for kind year? source what a for had working better, little of cash. bit working turns turns then extended check capital working maybe capital doing due the and seems your to but plans flow Just just kind talk next about is you're cash bring convert about And

Bryan Mittelman

Jeff, is Bryan. this

I As to about about bring inventory capital, we as the should inventory line evolved working been like. changed AR/AP muted that levels management focus have the across down all continuing achieve our it. we key have remains reductions think philosophy somewhat and ability inventory. top I we we impacted year. say, to or Certainly, And And this the has think would our around inventory

We addressing in have incentive plans specifically that place.

but little at quality has degraded, So a a it not from that focus. really outstanding I especially actually wouldn't are in good certainly, the on and of is that. the bit The sales aging us key the to a AR a completely tends say where with look we're as happening user we the again, us. directly really end between are more bit news is eye with market. keep little risks that that, or insulated we dealers here day that given reside the customer than in watchful is But what's the some there

really over days So next say, inventory over down or But continue I or there inventory to think hand. on that focus. bring improve, I'll the to don't come of a will metric at And least, the million $XXX revenues levels down. there's of anyway, overall remain well maybe year inventory also, is the as opportunity net X,

expect of X. is year still there drive to amount So the over next we improvement in or that a good

options capacity our pivoting have then say, I'll on converts, under refinance us. we credit variety facility to Certainly, to that. have available to, your of And a the we question

healthy a balance of cash have can We sheet, use amount on our to well. as address that we which

continuing to be expect M&A. also We do to

converts, are debt there to available high whether B. then obviously yields, markets us, And Term other it's

which X% we is what -- that a interest rate. will the look costing we at where convert So do us, given regularly is convert the -- currently

evaluate been options take what what have we'll We continue maturity. that off closer hurry to to not our level again and the cash to are books, are best our in gets as that a but debt

Operator

Zakaria comes from next The question JPMorgan. from Tami

Tami Zakaria

up technician are increasing shore peers seeing side the the on there? question segment. do capacity the And about What first Foods services plans services. of any Commercial to We've fleet. My you you of have talk some your is for heard

going you're So curious into that next how thinking about year?

Timothy FitzGerald

for Well, challenge seen X all it across industry the service really lot a many a during been has of we've Certainly, out service industries. of ours, technicians went COVID. of

game-changing training them James strategies and future. got And to you once that very of hiring the say, running. how then in back we've on got really provide, you that our that, we called It's get been in significant technicians get because those on, technicians of his them up one we've I'll out focused So that and around reasons network. slide service into the

area. the in think grown got pillar were that been that I very months in we've large the service term, XX organization, as part of is partners on where for significantly in both and training sure we that had efforts from near industry-leading today service we're making we year agents strong to that those physically has the a having of very have ago. we've or number that's And the And about digitally. with agents, focused But a a now support the

way was could kind to on kind we been that unique in offer challenge some the the kind which our trained industry-wide of future. service, across well really of of that an making we've technicians, in but only programs become our So enough have not to brands sure we leader address

Operator

comes question from from The Walt Liptak next Seaport.

Walter Liptak

it XX% talked and to target? getting the the the Is in the about like continue that commercial In Good past, years. margin improve place margins. you've still couple of margin, sounds got next over the you work on things to to

Timothy FitzGerald

respectable is yes. think it strong, still what think mean now, holding I target, margins. we're are very Yes, right I we the

I think a in period. we're we're tough there -- the by that industry and leaders, one standards, we're doing of

have while that the said, tighten were I we're the a think strategic everybody on the of the While to are us that growth of remind that as And lot initiatives for period, a in of well. investments doubling got we belt, down we've drive lot just will future. strategic Bryan nature as kind the help we tightened this belt in

that part products. enhancing is of also our And of mix

lot on, pipeline. haven't because innovations. solutions And greatest Nieco touched products, -- that low-margin a really as the we're working ROI that today really benefits lot seen exited growing of we higher lot but comes investment of focused our yet comes through that with is a with we a that the an margins. think Steve the what are Those on to a is example which high that in the And is a of customer. As great I of is broiler customers. pipeline we're Again, have through and growth the that

of next the that through part to years. of kind the bridge roll as is So XX% to get the we several

Walter Liptak

Makes sense. wonder the more. One, couple I delineation sort And most versus it's can like U.S. just of Okay. global. America between North sounds of make a you if there's sales discussion like international? any

Timothy FitzGerald

market. Yes, as better in that North as has I us see you'd have been Europe, fared tougher America well as of companies I Europe. think late mean, other

out is to Asia. The other call thing probably

there, there for new We've chain Asia out -- and lot expansion the which -- as in quarter that has been sorry, in got are half. into the that is back or in results market, is is that a there has I'm stronger dynamics most kind weaker a coming planned softer X of the fed of been products for but companies. spot have market, too, Asia

as in headwind. pretty been you at and going strong that's China expand term, But to we of feel there. India, see some longer-term Asia look which outside about, well you if we regions just But near as market, as that other particularly the a in growth

Steve Spittle

talked Europe we I commercial a approach completely reinvestment an of think area been mean X add new the I and there. are in strategy would I calls, through team more about has just I thinking in with mean nuances specifically. in prior

really seeing see future having and both having and Kitchen to parts to the innovation Madrid. We're to the the did in I of to to starting think the of Innovation Kitchen of and East payoff payoff other Europe. kitchens continue Innovation Middle plans U.K. in we're bring the we

driven to to call some I think and be also beverage. in would Latin the really out starting of specific I ice that is by growth America quarter,

And products core so think I in adoption outside Latin exciting to it's the specifically. some America see

So quarter. certainly say Latin I Middle would East Europe positives international an standpoint the were for and from America, the

Walter Liptak

Great. been be they that like then Chipotle double-sided for testing forward with in me. might out grill, one rollout moving Okay. XXXX. has and And last sounds it

comments any on I So wonder that? if could you make

Timothy FitzGerald

product make grill plans. in the that great just let about think success it a is we'll automation that delivering a comments customers, and innovation, and double-sided new pipeline, example we're we've focused demonstrates a had comment of to a Chipotle the I would their had their with it's is significant of and market it on how we've ROI I where number our customers. in again, potential really,

that introduced years. it's over -- of just several it's mean, I So the we've great one last products the

Operator

we follow-up from And have Mig Dobre. a question

Mircea Dobre

question. on to balance wanted Jeff's follow just up sheet I

is of maturing next that build suspect this balance idea that that drag, to been generates got infer So year. paid your of potentially north million just down or balance of EPS bond to I allowing now. give that kind $X.XX $XXX it, $XXX here that take. you're obviously, And refinancing purely cash has sort because call another bond building million Are cash this, of you've we to

mean this, continued do related deployment And about you how then has capital stock also forward? think Because, multiple going your compressing. I to look,

So through pretty deployment relative other do. of valuation capital is few Is at obviously, might looking kind alternative buybacks a years a looked decent that more you fair the to different ago. And to it for it period. than we're things this difficult cyclically say time point, share a actually that are going

Bryan Mittelman

Bryan. is this Mig,

dollars the solely the not accumulating convert. intent directly with of are cash those earmarking to pay off We

incremental up. as to our look decided to fairly we the versus that activity on our some. We revolver And balance again. have are, anything don't for you now the We cash such outstanding loan, I rates have if that we the on we have that And term would do balances off right no a borrowing at costs say, access we expect to to now. grow let cash our under were ability earning pay M&A balance be decent picking

we then front of anticipate. times little deployment the generate some some that in more And be the half utilization will that, cash is So year. there a for of -- to tend the there the half bit we at of back in cash Also, more year.

we're higher today in interest that rates flexibility. certainly do are I into when entered right So we And that think just than now, point convert. a understand of we

issue convert, a Obviously, seen have when you overall coming you cost the coupon and the leverage isn't down. just our rate, total

manner Also we at appreciate looking growing been how that next the we things to perspective be amount flow evaluate utilize cash are on a best it's continuing of of little different where your we allocated cash focus we'll of debt been again, and different annual Obviously, a return evaluating on historically maybe shareholders. capital be generate that cash, of the some ways of other to to the the including year. So in and over large from allocation. to have should structure M&A side ways a capital are

Operator

to remarks. Tim I session. like for turn to closing would question-and-answer over concludes This conference our the back Fitzgerald

Timothy FitzGerald

at several confident our for we turn challenges inflect of for everybody, into sooner, Thank the macroeconomic ahead be currently to the the favorable the we face more would today today's hoped trough for on quarters longer-term tailwinds are us lead conditions a will and would segments. joining had you closing, believe like we again, while In we reiterate that call. We're I and into recovery.

of provide We're new positioning than transformational opening go-to-market sales as capabilities our We're in customer making We're all businesses up opportunities, is leading win ever. in technology targeted to innovation. we're market stronger across our expanding poised growth service to and new and investments and experiences. differentiated X into adjacencies,

thank years. and will strategies extending over these great next it conditions made call. have further That's everybody, market for to Have continue dividends improve, today's several leadership the today, we for a the attending pay confident our you, day. and investments as We're

Operator

presentation. attending today's conference concluded. you The has now Thank for

disconnect. may You now

The Middleby Corporation (MIDD) 31 Oct 242024 Q3 Earnings call transcript