Middleby Corp Q2 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph Grabowski - Robert W. Baird & Co Inc - Analyst : It's Joe Grabowski on for Mig this morning. So I also wanted to say that we appreciated the guidance. It's very helpful. And I also wanted to ask a question on the guidance. It seems like the guidance implies that Q3 consolidated organic sales are going to be down low single digit, but then Q4 consolidated organic sales are going to be down mid-single digit. Assuming that's correct, is it mostly just a factor of the prior year comparison? Or anything else you want to call out?

Question: Joseph Grabowski - Robert W. Baird & Co Inc - Analyst : Perfect. And then my next question would be on the outlook for the large QSR customers in the second half. It seems like maybe it's gotten a little worse than where we were 90 days ago. Maybe just talk a little bit more about what you're seeing with large QSR customers. I think you mentioned that new store openings were being revised down. Do you think that's just going to get pushed out to next year or just -- any color you can give would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, MIDD.OQ - Q2 2025 Middleby Corp Earnings Call

Question: Joseph Grabowski - Robert W. Baird & Co Inc - Analyst : Got it. Okay. That's very helpful. And if I can just maybe sneak in one more question. You mentioned that the tariff impact is expected to be fully offset by the start of next year in part through operating initiatives. You don't have to be specific, but just kind of generally speaking, what would some of those operating initiatives be in addition to price increases to offset the tariffs?

Question: Jeffrey Hammond - KeyBanc Capital Markets Inc - Analyst : I'll echo the comments on the guide. I appreciate the color there and a formal guide. Just -- I just want to hit the -- I guess, the $25 million to $35 million of tariff impact that's not going to be covered this year, can you give us a better sense of how that's impacted REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, MIDD.OQ - Q2 2025 Middleby Corp Earnings Call by business? It seems like maybe FP and Res Kitchen are impacted a little bit more, but if you could break that down a little bit better, that would be great.

Question: Jeffrey Hammond - KeyBanc Capital Markets Inc - Analyst : Okay. Great. And then -- that's very helpful. I think, Bryan, you said you characterized FP is modestly improving from a trend. Can you just give us what you're seeing in terms of order rates and backlog growth kind of cutting through the quarter-to-quarter lumpiness? And then just -- I know you announced the deal, just kind of speak to M&A pipeline in FP as you think about -- as you head into the spin?

Question: Timothy Thein - Raymond James - Analyst : First question was a follow-up for an earlier conversation with Steve on the Commercial business. And I'm just curious on these profit and margin pressures that have been ongoing for your restaurant customers and franchisees. I'm curious if you're seeing or have seen any impact in terms of maybe product mix or maybe share moving around, i.e., is there any shift to lower spec equipment or less technology uptake. I guess one could make the argument maybe they'd go the other way if there's issues around labor availability. But just curious your thoughts on that just general question.

Question: Timothy Thein - Raymond James - Analyst : Yes. Okay. And maybe, Tim, I don't know -- I forgot if it was you or Bryan that mentioned the comment about the long-term target to grow EPS high-single to low double-digit growth. I'm just thinking about the long-term profile of the Commercial business. And obviously, this post-COVID period has been distorted in many ways. But how would you think about just kind of the underlying growth of the commercial business? Is it -- it used to be kind of a GDP plus-plus. And in recent years has kind of normalized. I'm guessing you have plans for -- I would think of pretty nice outgrowth. And I'm just curious how you think in that construct to grow EPS double digit annually? what you would think about in terms of the underlying growth of the global Commercial business?

Question: Tami Zakaria - JPMorgan Chase & Co - Analyst : My first question is, could you refresh us on how you're thinking about your direct-to-customer initiatives? Any thoughts on furthering your equipment and part sales by enhancing the DTC channel, any launches in the pipeline or ideas in the pipeline that we should look forward to in the coming quarters or the coming years, I think that would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 06, 2025 / 3:00PM, MIDD.OQ - Q2 2025 Middleby Corp Earnings Call

Question: Tami Zakaria - JPMorgan Chase & Co - Analyst : Understood. That's very helpful. Just a follow-up. I was wondering, is there any plan? Or is there any business case for going direct to customer even with sales by having a website and having some of your business customers onboarded there so they can directly order from you in parts and new equipment alike. So that was the genesis of my question, but I think you answered most of it.

Question: Walter Liptak - Seaport Research Partners - Analyst : My question is on the capital allocation. And it looks like with the purchases that you might have made so far in the third quarter, you're at about $500 million of buybacks so far this year. Do we continue -- do you think you'll be continuing on with buybacks sort of at that rate in the back half of the year? Or are you thinking about other sorts of capital allocation for the back half?

Question: Walter Liptak - Seaport Research Partners - Analyst : Okay. Great. And so your debt ratio looks like it's about 2.5%. And I just wanted to understand the M&A strategy going forward. It sounds like FP might have some deals that you could do maybe in the back half, but -- in the past, you've always consolidated and done good acquisitions in the CFS segment, too. During the sector weakness, wouldn't this be a good time to be consolidating and looking at deals? Or -- is CFS still -- do they still have a deal pipeline?

Question: Walter Liptak - Seaport Research Partners - Analyst : Okay. Yes, that would be surprised if you didn't do any more CFS deals. And maybe just a last one. While you were answering another question, you talked about how replacement of equipment in the field that in CFS is there's some delays in refurbishments or replacement. And I can't remember, I've ever heard you guys talk about that in the past. What's the driver of that? And what should we think about for when maybe some pent-up demand for replacement comes back?