The food service and processing equipment maker, The Middleby Corporation (MIDD), posted earnings per share of $2.03 for fourth-quarter 2012, up 8.6% compared with $1.87 in the year-ago quarter. It also surpassed the Zacks Consensus Estimate of $1.78 by 14.0%. The increase in earnings is attributed to a significant gain from the acquisitions made in 2012.
Earnings in 2012 came in at $6.49, an increase of 26.0% compared with $5.15 per share in 2011. Even in 2012, the company’s earnings surpassed the Zacks Consensus Estimate of $6.26 by 3.7%.
Revenue: In the fourth quarter of 2012, total sales were $291.6 million, up 19.6% year over year, primarily driven by contributions from various acquisitions undertaken by the company. Excluding the acquisitions, sales grew 8.3% year over year. Also, revenue beat the Zacks Consensus Estimate of $284.0 million.
In the reported quarter, revenue from Commercial Foodservice Equipment Group increased 5.3% year over year. This was a result of the acquisitions as well as increase in demand from its customers. The chain restaurant owners who plan to upgrade equipment and thereby increase the efficiency of their stores, contributed significantly. Excluding the contributions from the acquisitions, the segment saw a year-over-year rise of 3.9%.
In 2012, the segment saw an increase in revenue of 8.7% over 2011. A significant contribution to the revenue was made from the acquisition of Nieco Corporation in Oct 2012. Excluding the impact of the acquisition, revenue grew 5.0% for 2012.
Revenue from Food Processing Equipment Group soared 89.0% year over year in the quarter, aided by the acquisitions of Baker Thermal Solutions in Jul 2012 and Stewart Systems in Sep 2012. Excluding this, the revenue grew 29.6% year over year. This was due to the acquisitions as well as customers' plans of expanding and modernizing their existing plants. Also, a rise in the demand of pre-cooked and processed food was seen in the developing regions during the period.
For 2012, revenue from this segment grew 89.9% over the year-ago comparable period. Negating the effects of acquisitions, revenue from this segment grew 19.1% in 2012 over 2011.
Margins: Gross profit in the reported quarter spiked 13.6% year over year to $113.2 million. Gross profit margin in the quarter dropped 210 basis points to 38.8% due to the lower margin yielding acquisitions undertaken by the company, along with a shift in the sales mix towards the low margin Food Processing Equipment Group.
The company's operating margin increased to 20.1% in the reported quarter from 18.4% in the year-ago comparable quarter due to increased gross profit as well reduction in operating expenses.