Middleby Corp Q3 2025 Earnings Call Transcript

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

Question: Mircea (Mig) Dobre - Robert W. Baird & Co Inc - Analyst : So gosh, there's a whole lot to talk about here, I guess. And maybe while I would start is with a question on just the strategic evaluation of the company more broadly, you've obviously told us that Residential is now part of this review process. I understand you don't want to comment further. But the way I interpreted your statement, Tim, is to suggest that there's more to it than just the spin of processing, maybe strategic evaluation of resi -- is there something going on in commercial food service as well that maybe you're working on or that shareholders need to be aware of? And then for Food processing specifically, I appreciate the time line. I'm curious as to how you're thinking about the management team that will be running this business. Anything that you can share with us procedurally in terms of the things that you have accomplished thus far in anticipation of this spin?

Question: Mircea (Mig) Dobre - Robert W. Baird & Co Inc - Analyst : Okay. Okay. That's helpful. Then my follow-up on commercial foodservice. I'm looking at the fourth quarter guidance, and there is, if I'm doing the math right, it seems to be an implied an organic decline of somewhere around mid-single digit on a year-over-year basis and the business down sequentially from a seasonal standpoint, this is a departure from what we normally see in the fourth quarter being down, call it of mid-single digits sequentially. So I guess I'm curious as to what's driving that. It sounds that QSR is driving that -- but the point here is that while we're looking at Q3, we saw a bit of a recovery that's not carrying into Q4. So was Q3 unique in any way? Was there some demand pull forward or destocking or anything of the sort? And how do you assess the broader trends in this business? Especially as we start thinking about 2026, is that going to be yet another year of erosion based on what you know thus far? Or is there any reason to be more optimistic?

Question: James Ko - Jefferies LLC - Analyst : This is James on for Saree. I guess sticking with the commercial food service here, you just talked about like US traffic remains a headwind. And like based on the data that's kind of weakening further as the latest data available. And in this backdrop, like what are the like non-traffic levers that can still drive sales among QSRs? Or is traffic the shore driver here? And how many periods of like traffic recovery, would you need to see before change kind of step up investment here?

Question: James Ko - Jefferies LLC - Analyst : Got it. That's very helpful. And I guess on the guidance here on EBITDA guidance, can you kind of please walk us through like the contribution by each segment for 4Q? How you think about it?

Question: Jeffrey Hammond - KeyBanc Capital Markets Inc - Analyst : I guess just on Res Kitchen, just I think when you did the food processing spend, you got a lot of questions on why not Res Kitchen. And just from your view, what's changed to kind of revisit that? And then just on the Grill business, around tariffs. Just what are you doing or thinking about to structurally change your footprint going forward to kind of manage those -- that tariff issue?

Question: Jeffrey Hammond - KeyBanc Capital Markets Inc - Analyst : Okay. That's helpful. And then just on food processing, margins have stepped down quite a bit year-to-year, and I think you mentioned mix and tariff and maybe you can spike that out a little more. But -- as you look at the pipeline and you look at maybe some of the income orders, how are you thinking about margins as we go into 4Q and as we go into '26 in the spin?

Question: Tim Thein - Raymond James - Analyst : I've got 2, if I may, on the commercial business. The first -- just thinking back to the framework we talked about a couple of years ago with respect to kind of what's going to drive EBITDA or what can drive EBITDA margins that commercial business, sales mix was one of the big levers that we saw. And obviously, you fast forward and the volumes quite haven't come through probably like we expected. But I'm just curious as you kind of revisit that and think through that technology and automation was highlighted earlier. So presumably, that's continues to be an emphasis. But I'm curious how that -- how kind of that has developed in terms of as a catalyst to support margins, but also the emphasis and the strength in ICE and beverage, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 1:30PM, MIDD.OQ - Q3 2025 Middleby Corp Earnings Call I'm just curious, I'm assuming that would be additive or kind of supportive of that sale, but not sure even at -- given the growth in that channel, is that a fair assumption, i.e., it is favorable to mix. So we'll start with that one, please.

Question: Tim Thein - Raymond James - Analyst : Got it. Okay. And then just can you update us on the backlog in that business and where -- I don't know where the end of the third quarter where you're expecting to end the year and just thinking if that's supportive of kind of the earlier discussion as whether or not '26 could be a growth year? Just maybe put that order backlog in the context of where you normally operate into fiscal year?

Question: Mircea (Mig) Dobre - Robert W. Baird & Co Inc - Analyst : A follow-up. And I just want to go back to commercial foodservice. And you talked about some areas of growth. You talk about international, for instance, has been an area of growth. There are portions of your business, however, that are challenged. And I guess, I am wondering, as you're conducting these strategic reviews and you think about growth through the cycle as it were, how do you separate what is cyclical in compressing the growth in this segment versus what may be more structural in nature? And how do you think about adjusting the portfolio, do you have the right portfolio in this segment to ensure a return to more sustainable long-term growth. And if the answer is no that adjustments are needed, what are some of the things that you're contemplating in this regard. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 1:30PM, MIDD.OQ - Q3 2025 Middleby Corp Earnings Call