MIDDLEBY Corp: Form 10-Q for the period ended Sep 27, 2025

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. The company cautions readers that these projections are based upon future results or events and are highly dependent upon a variety of important factors which could cause such results or events to differ materially from any forward-looking statements which may be deemed to have been made in this report, or which are otherwise made by or on behalf of the company. Such factors include, but are not limited to, the outcome of our strategic review; 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 and interest rates; quarterly variations in operating results; dependence on key customers; international exposure; risks associated with the company’s foreign operations, including foreign exchange, tariffs and political risks affecting international sales; unfavorable tax law changes and tax authority rulings; ability to protect trademarks, copyrights and other intellectual property; cybersecurity attacks and other breaches in security; changing market conditions, including inflation; the impact of competitive products and pricing; the impact of announced management and organizational changes; the state of the residential construction, housing and home improvement markets; the state of the credit markets, including mortgages, home equity loans and consumer credit; intense competition in the company's business segments including the impact of both new and established global competitors; the timely development and market acceptance of the company’s products; the availability and cost of raw materials; the company's continued ability to realize profitable growth through the sourcing and completion of strategic acquisitions; and other risks detailed herein and from time-to-time in the company’s SEC filings, including the company’s 2024 Annual Report on Form 10-K. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this report are made only as of the date hereof and, except as required by federal securities laws and rules and regulations of the SEC, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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 by first half 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 have 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 are creating 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 or at all. 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)

Results of Operations

The following table sets forth certain consolidated statements of earnings items as a percentage of net sales for the periods:

27

Three Months Ended September 27, 2025 as compared to Three Months Ended September 28, 2024

NET SALES. Net sales for the three months period ended September 27, 2025 increased by $39.3 million or 4.2% to $982.1 million, as compared to $942.8 million in the three months period ended September 28, 2024. Net sales increased by $30.8 million, or 3.3%, from the fiscal 2024 acquisitions of Emery Thompson, JC Ford, and Gorreri and the fiscal 2025 acquisitions of Frigomeccanica and Oka. Excluding acquisitions, net sales increased $8.5 million, or 0.9%, from the prior year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the three months period ended September 27, 2025 increased net sales by approximately $9.8 million or 1.0%. Excluding the impact of foreign exchange and acquisitions, sales decreased 0.1% for the three months period ended September 27, 2025 as compared to the prior year period, including a net sales increase of 1.6% at the Commercial Foodservice Equipment Group, a net sales decrease of 5.6% at the Food Processing Equipment Group and a net sales decrease of 0.6% at the Residential Kitchen Equipment Group.

• Net sales of the Commercial Foodservice Equipment Group increased by $14.3 million, or 2.4%, to $606.0 million in the three months period ended September 27, 2025, as compared to $591.7 million in the prior year period. Excluding the acquisition of Emery Thompson, net sales increased $12.6 million, or 2.1%, at the Commercial Foodservice Equipment Group. Excluding the impact of foreign exchange and the acquisition, net sales increased $9.6 million, or 1.6%. Domestically, the company realized a sales increase of $15.3 million, or 3.7%, to $433.7 million, as compared to $418.4 million in the prior year period. Excluding the acquisition, the increase in domestic sales was $13.7 million, or 3.3%. The increase in domestic sales is related to improved market conditions. International sales decreased $1.0 million, or 0.6%, to $172.3 million, as compared to $173.3 million in the prior year period. Excluding the impact of foreign exchange and the acquisition, the decrease in international sales was $4.1 million, or 2.4%. 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 $23.4 million, or 13.2%, to $201.3 million in the three months period ended September 27, 2025, as compared to $177.9 million in the prior year period. Net sales from the acquisitions of JC Ford, Gorreri, Frigomeccanica and Oka, accounted for an increase of $29.1 million during the three months period ended September 27, 2025. Excluding the impact of foreign exchange and acquisitions, net sales decreased $9.9 million, or 5.6%, at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $16.3 million, or 15.6%, to $120.8 million, as compared to $104.5 million in the prior year period. Excluding acquisitions, the increase in domestic sales was $1.0 million, or 1.0%. The increase in domestic sales is primarily driven by higher sales volumes of protein products. International sales increased $7.1 million, or 9.7%, to $80.5 million, as compared to $73.4 million in the prior year period. Excluding the impact of foreign exchange and acquisitions, the decrease in international sales was $10.9 million, or 14.9%. The decrease in international sales is primarily related to slower market conditions in the European markets for the sale of protein products and Asian markets for the sale of bakery products.
• Net sales of the Residential Kitchen Equipment Group increased by $1.6 million, or 0.9%, to $174.8 million in the three months period ended September 27, 2025, as compared to $173.2 million in the prior year period. Excluding the impact of foreign exchange, net sales decreased $1.0 million, or 0.6% at the Residential Kitchen Equipment Group. Domestically, the company realized a sales decrease of $2.1 million, or 1.9%, to $110.8 million, as compared to $112.9 million in the prior year period. The decrease in domestic sales is primarily driven by challenging market conditions. International sales increased $3.7 million, or 6.1%, to $64.0 million, as compared to $60.3 million in the prior year period. Excluding the impact of foreign exchange, the increase in international sales was $1.1 million, or 1.8%. The increase in international sales is primarily driven by improved market conditions, primarily in the Latin American and European markets.

GROSS PROFIT. Gross profit increased to $361.3 million in the three months period ended September 27, 2025, as compared to $355.4 million in the prior year period, primarily driven by higher sales volumes. The impact of foreign exchange rates increased gross profit by approximately $3.7 million. The gross margin rate was 36.8% in the three months period ended September 27, 2025, as compared to 37.7% in the prior year period, primarily impacted by tariffs and product mix.

• Gross profit at the Commercial Foodservice Equipment Group increased by $4.3 million, or 1.8%, to $238.1 million in the three months period ended September 27, 2025, as compared to $233.8 million in the prior year period. Excluding the acquisition of Emery Thompson, gross profit increased by $3.4 million. The impact of foreign exchange rates increased gross profit by approximately $1.3 million. The gross margin rate decreased to 39.3%, as compared to 39.5% in the prior year period, primarily driven by tariffs. The gross margin rate, excluding the impact of foreign exchange and the acquisition, was 39.2%.
• Gross profit at the Food Processing Equipment Group decreased by $0.2 million, or 0.3%, to $69.0 million in the three months period ended September 27, 2025, as compared to $69.2 million in the prior year period. Gross profit from the acquisitions of JC Ford, Gorreri, Frigomeccanica and Oka increased gross profit by $6.2 million. The impact of foreign exchange rates increased gross profit by approximately $1.3 million. Excluding the impact of foreign exchange rates and acquisitions, gross profit decreased by $7.7 million. The gross profit margin rate decreased to 34.3%, as compared to 38.9% in the prior year period, primarily related to tariffs and product mix. The gross margin rate, excluding the impact of foreign exchange and acquisitions, was 36.6%.
• Gross profit at the Residential Kitchen Equipment Group increased by $1.5 million, or 2.8%, to $54.3 million in the three months period ended September 27, 2025, as compared to $52.8 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $1.1 million. Gross profit increased related to higher sales volume. The gross margin rate increased to 31.1%, as compared to 30.5% in the prior year period, primarily related to product mix and benefits from cost reduction initiatives, offset by tariffs. The gross margin rate excluding the impact of foreign exchange was 30.9%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased to $203.6 million in the three months period ended September 27, 2025, as compared to $179.5 million in the three months period ended September 28, 2024. As a percentage of net sales, selling, general, and administrative expenses were 20.6% in the three months period ended September 27, 2025 as compared to 19.0% in the three months period ended September 28, 2024.

Selling, general and administrative expenses reflect increased costs of $7.1 million associated with acquisitions, including $1.3 million of intangible amortization expense. Selling, general and administrative expenses reflect increases in strategic transaction costs of $5.9 million, professional fees of $2.5 million, advertising and trade shows of $3.8 million, commissions of $2.0 million, contingent consideration of $1.8 million and travel expenses of $1.7 million; offset by a decrease of $2.9 million in combined compensation costs and share-based compensation. Foreign exchange rates had an unfavorable impact of $2.2 million.

RESTRUCTURING EXPENSES. Restructuring expenses increased $0.3 million to $2.8 million for the three months period ended September 27, 2025, as compared to $2.5 million for the three months period ended September 28, 2024. Restructuring expenses in the three months period ended September 27, 2025 related primarily to headcount reductions and facility consolidations within the Residential Kitchen Equipment Group. Restructuring expenses in the three months period ended September 28, 2024 related primarily to headcount reductions and facility consolidations within all three segments.

IMPAIRMENTS. The company recognized non-cash impairment of $709.1 million in the three months period ended September 27, 2025 primarily associated with the interim quantitative impairment tests of goodwill of the Residential Kitchen Equipment Group reporting unit and several trademarks within Residential Kitchen Equipment Group. See Note 8 - Goodwill and Note 9 - Intangibles to the Condensed Consolidated Financial Statements for further information on impairments. There was no impairment expense in the prior year period.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $25.1 million in the three months period ended September 27, 2025, as compared to $21.4 million in the prior year period, primarily reflecting the increase in interest rates and net debt levels. Net periodic pension benefit decreased $2.3 million to $1.6 million in the three months period ended September 27, 2025, as compared to $3.9 million in the prior year period, related to the increase in discount rate used to calculate the interest cost and decrease in expected return on assets as a result of the lower asset value and slightly lower assumed return on assets than in prior years. Other expense was $1.1 million in the three months period ended September 27, 2025, as compared to $1.2 million in the prior year period and consists mainly of net foreign exchange gains and losses.

INCOME TAXES. A tax benefit of $(66.0) million, at an effective rate of 11.4%, was recorded during the three months period ended September 27, 2025, as compared to a tax provision of $40.5 million at an effective rate of 26.2%, in the prior year period. During the three months period ended September 27, 2025, the effective tax rate was less than the prior year period due to a portion of the impairment charges within the Residential Kitchen Equipment Group being non-deductible goodwill. The effective tax rate for the three months period ended September 27, 2025, when excluding the impairment charges within the Residential Kitchen Equipment Group, was 23.7% and is higher than the U.S. statutory tax rate of 21% primarily due to state taxes and foreign tax rate differentials.

On July 4, 2025, P.L. 119-21, commonly known as the One Big Beautiful Bill Act, was enacted into law in the United States. The company is currently evaluating the tax law changes and does not expect a material impact to its effective tax rate.

Nine Months Ended September 27, 2025 as compared to Nine Months Ended September 28, 2024

NET SALES. Net sales for the nine months period ended September 27, 2025 increased by $5.4 million, or 0.2%, to $2,866.7 million, as compared to $2,861.3 million in the nine months period ended September 28, 2024. Net sales increased by $84.7 million, or 3.0%, 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 $79.3 million, or 2.8%, from the prior year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the nine months period ended September 27, 2025 increased net sales by approximately $10.7 million. Excluding the impact of foreign exchange and acquisitions, sales decreased 3.1% for the nine months period ended September 27, 2025 as compared to the prior year period, including a net sales decrease of 2.2% at the Commercial Foodservice Equipment Group, a net sales decrease of 7.0% at the Food Processing Equipment Group and a net sales decrease of 2.3% at the Residential Kitchen Equipment Group.

• Net sales of the Commercial Foodservice Equipment Group decreased by $33.6 million, or 1.9%, to $1,749.3 million in the nine months period ended September 27, 2025, as compared to $1,782.9 million in the prior year period. Excluding the acquisition of Emery Thompson, net sales of the Commercial Foodservice Equipment Group decreased $39.7 million, or 2.2%, as compared to the prior year period. Excluding the impact of foreign exchange and the acquisition, net sales decreased $39.9 million, or 2.2%, at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales decrease of $25.7 million, or 2.0%, to $1,260.1 million, as compared to $1,285.8 million in the prior year period. Excluding the acquisition, the decrease in domestic sales was $31.6 million, or 2.5%, as compared to the prior year period. The decrease in domestic sales is related to slower market conditions particularly with lower chain customer store traffic and replacement demand. International sales decreased $7.9 million, or 1.6%, to $489.2 million, as compared to $497.1 million in the prior year period. Excluding the impact of foreign exchange and the acquisition, the decrease in international sales was $8.3 million, or 1.7%. The decrease in international sales is related to slow market conditions, primarily in the Latin American and Asian markets.
• Net sales of the Food Processing Equipment Group increased by $47.0 million, or 8.7%, to $585.5 million in the nine months period ended September 27, 2025, as compared to $538.5 million in the prior year period. Net sales from the acquisitions of GBT GmbH Bakery, MaxMac, JC Ford, Gorreri, Frigomeccanica and Oka accounted for an increase of $78.6 million during the nine months period ended September 27, 2025. Excluding the impact of acquisitions, net sales of the Food Processing Equipment Group decreased $31.6 million, or 5.9%, as compared to the prior year period. Excluding the impact of foreign exchange and acquisitions, net sales decreased $37.6 million, or 7.0%, at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $21.3 million, or 6.7%, to $339.0 million, as compared to $317.7 million in the prior year period. This includes an increase of $38.7 million from acquisitions. Excluding acquisitions, the decrease in domestic sales was $17.4 million, or 5.5%, as compared to the prior year period. The decrease in domestic sales was driven primarily by protein products. International sales increased $25.7 million, or 11.6%, to $246.5 million, as compared to $220.8 million in the prior year period. This includes an increase of $39.9 million from acquisitions and an increase of $6.0 million related to the favorable impact of foreign exchange rates. Excluding the impact of foreign exchange and acquisitions, the sales decrease in international sales was $20.2 million, or 9.1%. The decrease in international sales reflects slower market conditions in the European and Asian markets.
• Net sales of the Residential Kitchen Equipment Group decreased by $8.0 million, or 1.5%, to $531.8 million in the nine months period ended September 27, 2025, as compared to $539.9 million in the prior year period. Excluding the impact of foreign exchange, net sales decreased $12.5 million, or 2.3%, at the Residential Kitchen Equipment Group. Domestically, the company realized a sales decrease of $9.9 million, or 2.9%, to $334.8 million, as compared to $344.7 million in the prior year period. International sales increased $1.9 million, or 1.0%, to $197.1 million, as compared to $195.2 million in the prior year period. Excluding the impact of foreign exchange, the net sales decrease in international sales was $2.6 million, or 1.3%. The decrease in net sales is primarily driven by challenging market conditions domestically and in the European markets.

GROSS PROFIT. Gross profit decreased to $1,078.5 million in the nine months period ended September 27, 2025 as compared to $1,081.4 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $4.8 million. The gross margin rate was 37.6% in the nine months period ended September 27, 2025, as compared to 37.8% in the nine months period ended September 28, 2024.

• Gross profit at the Commercial Foodservice Equipment Group decreased by $4.6 million, or 0.6%, to $704.6 million in the nine months period ended September 27, 2025, as compared to $709.2 million in the prior year period. Excluding the acquisition of Emery Thompson, gross profit decreased by $8.0 million related to lower sales volume. The impact of foreign exchange rates increased gross profit by approximately $0.6 million. The gross margin rate increased to 40.3%, as compared to 39.8% in the prior year period, primarily related to profitability initiatives. The gross margin rate, excluding the acquisition and the impact of foreign exchange, was 40.2%.
• Gross profit at the Food Processing Equipment Group increased by $1.1 million, or 0.5%, to $210.9 million in the nine months period ended September 27, 2025, as compared to $209.8 million in the prior year period. Gross profit from the acquisitions of GBT GmbH Bakery, MaxMac, JC Ford, Gorreri, Frigomeccanica and Oka increased gross profit by $23.4 million. Excluding acquisitions, gross profit decreased by $22.3 million due to lower sales volume and product mix. The impact of foreign exchange rates increased gross profit by approximately $2.3 million. The gross profit margin rate decreased to 36.0%, as compared to 39.0% in the prior year period, primarily related to product mix. The gross margin rate, excluding acquisitions and the impact of foreign exchange, was 37.0%.
• Gross profit at the Residential Kitchen Equipment Group increased by $1.8 million, or 1.1%, to $162.8 million in the nine months period ended September 27, 2025, as compared to $161.0 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $1.9 million. The gross margin rate increased to 30.6%, as compared to 29.8% in the prior year period, primarily related to product mix and benefits from cost reduction initiatives, offset by tariffs. The gross margin rate, excluding acquisitions and the impact of foreign exchange, was 30.5%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased to $619.8 million in the nine months period ended September 27, 2025, as compared to $584.1 million in the nine months period ended September 28, 2024. As a percentage of net sales, selling, general, and administrative expenses were 21.6% in the nine months period ended September 27, 2025, as compared to 20.4% in the nine months period ended September 28, 2024.

Selling, general and administrative expenses reflect increased costs of $18.1 million associated with acquisitions, including $3.6 million of intangible amortization expense. Selling, general and administrative expenses reflects increases in strategic costs of $15.9 million, advertising and trade shows of $6.4 million, professional fees of $6.3 million, commissions of $5.7 million and travel expenses of $2.0 million. This was offset by a decrease of $15.0 million related to the combined impact of compensation costs and share-based compensation, and $5.4 million related to intangible amortization expense. Foreign exchange rates had an unfavorable impact of $1.9 million.

RESTRUCTURING EXPENSES. Restructuring expenses decreased $3.2 million to $7.8 million in the nine months period ended September 27, 2025 from $11.0 million in the nine months period ended September 28, 2024. Restructuring expenses in the nine months period ended September 27, 2025 related primarily to headcount reductions and facility consolidations within the Residential Kitchen Equipment Group and Commercial Foodservice Equipment Group. Restructuring expenses in the nine months period ended September 28, 2024 related primarily to headcount reductions and facility consolidations within all three segments.

IMPAIRMENTS. The company recognized non-cash impairment of $709.1 million in the nine months period ended September 27, 2025 primarily associated with the interim quantitative impairment tests of goodwill of the Residential Kitchen Equipment Group reporting unit and several trademarks within Residential Kitchen Equipment Group. See Note 8 - Goodwill and Note 9 - Intangibles to the Condensed Consolidated Financial Statements for further information on impairments. There was no impairment expense in the prior year period.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $63.4 million in the nine months period ended September 27, 2025, as compared to $72.2 million in the prior year period, primarily reflecting the decrease in interest rates and net debt levels. Net periodic pension benefit decreased $6.5 million to $4.7 million in the nine months period ended September 27, 2025, as compared to $11.2 million in the prior year period related to the increase in discount rate used to calculate the interest cost and decrease in expected return on assets as a result of the lower asset value and slightly lower assumed return on assets than in prior years. Other expense was $7.5 million in the nine months period ended September 27, 2025, as compared to other expense of $1.0 million in the prior year period and consists mainly of foreign exchange gains and losses.

INCOME TAXES. A tax benefit of $(9.8) million, at an effective rate of 3.0%, was recorded during the nine months period ended September 27, 2025, as compared to a tax provision of $108.2 million at an effective rate of 25.5%, in the prior year period. During the nine months period ended September 27, 2025, the effective tax rate was less than the prior period ending due to a portion of the impairment charges within the Residential Kitchen Equipment Group being non-deductible goodwill. The effective tax rate for the nine months period ended September 27, 2025, when excluding the impairment charges within the Residential Kitchen Equipment Group, was 22.6% and is higher than the U.S. statutory tax rate of 21% primarily due to state taxes and foreign tax rate differentials.

Financial Condition and Liquidity

Total cash and cash equivalents decreased by $514.4 million to $175.1 million at September 27, 2025 from $689.5 million at December 28, 2024. Total debt decreased to $2.1 billion at September 27, 2025 from $2.4 billion at December 28, 2024.

OPERATING ACTIVITIES. Net cash provided by operating activities after changes in assets and liabilities amounted to $439.5 million as compared to $447.1 million in the prior year.

During the nine months period ended September 27, 2025, working capital changes impacted operating cash flows primarily driven by increased inventory levels of $32.9 million, an increase in prepaid expenses and other assets of $26.7 million due to impacts from the timing of tax payments and status of over-time revenue contracts, an increase in accounts payable of $28.7 million and an increase of $8.4 million in accrued expenses and other liabilities, including impacts from the timing of payments made for taxes, various customer programs and incentive programs.

INVESTING ACTIVITIES. During the nine months period ended September 27, 2025, net cash used for investing activities amounted to $110.6 million. Cash used to fund acquisitions and investments amounted to $34.5 million. Additionally, $74.9 million was expended, primarily to upgrade production equipment, manufacturing facilities, and investments in innovation centers.

FINANCING ACTIVITIES. Net cash flows used for financing activities amounted to $866.0 million during the nine months period ended September 27, 2025. The company’s borrowing activities during 2025 included $865.5 million of net proceeds under its Credit Facility, $449.3 million of net repayments under its 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 Agreement from October 21, 2026 to April 28, 2028.

Additionally, in 2025 the company repurchased $514.3 million of Middleby common stock shares. This was comprised of $13.9 million to repurchase 83,089 shares of Middleby common stock that were surrendered to the company for withholding taxes related to restricted stock vestings and $500.4 million used to repurchase 3,462,088 shares of its common stock under a repurchase program.

At September 27, 2025, 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.

Recently Issued Accounting Standards

See Part I, Item 1, Notes to Condensed Consolidated Financial Statements, Note 4 - Recently Issued Accounting Standards, of this Quarterly Report on Form 10-Q.

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 the company's consolidated financial statements. There have been no changes in the company's critical accounting policies, which include revenue recognition, inventories, goodwill and indefinite-life intangibles, convertible debt, pensions benefits, and income taxes, as discussed in the company's Annual Report on Form 10-K for the year ended December 28, 2024 (the “2024 Annual Report on Form 10-K”), except for goodwill and indefinite-lived intangibles as discussed in Note 8 - Goodwill and Note 9 - Intangibles to the Condensed Consolidated Financial Statements.

Interest Rate Risk

The company is exposed to market risk related to changes in interest rates. The following table summarizes the maturity of the company’s debt obligations:

The company is exposed to interest rate risk on its floating-rate debt. The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt. Prior to July 1, 2023, the company amended its Credit Facility and the existing interest rate swap agreements to transition the interest reference rate from one-month LIBOR to one-month Secured Overnight Financing Rate ("SOFR"). There were no other changes to the company's Credit Facility or timing of cash flows. The amendment was entered into because the LIBOR rate historically used was no longer published after June 30, 2023. The company utilized expedients within ASC 848 to conclude that this amendment should be treated as a non-substantial modification of the existing contract, resulting in no impact to the company's consolidated financial statements. The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income. As of September 27, 2025, the fair value of these instruments was an asset of $14.6 million. The change in fair value of these swap agreements in the first nine months of 2025 was a loss of $11.8 million, net of taxes. The potential net loss on fair value for such instruments from a hypothetical 10% adverse change in quoted interest rates would not have a material impact on the company's financial position, results of operations and cash flows.

Foreign Exchange Derivative Financial Instruments

The company uses derivative financial instruments, principally foreign currency forward purchase and sale contracts with terms of less than one year, to hedge its exposure to changes in foreign currency exchange rates. The company’s primary hedging activities are to mitigate its exposure to changes in exchange rates on intercompany and third-party trade receivables and payables. The company does not currently enter into derivative financial instruments for speculative purposes. In managing its foreign currency exposures, the company identifies and aggregates naturally occurring offsetting positions and then hedges residual balance sheet exposures. The potential net loss on fair value for such instruments from a hypothetical 10% adverse change in quoted foreign exchange rates would not have a material impact on the company's financial position, results of operations and cash flows. The fair value of the forward and option contracts was a loss of $0.4 million at the end of the third quarter of 2025.

Derivative financial instruments are recognized on the balance sheet as either an asset or a liability measured at fair value. Changes in the market value and the related foreign exchange gains and losses are recorded in the statement of earnings.

The company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of September 27, 2025, the company's management, with the participation of the company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures. Based on the foregoing, the company's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of this period.

During the quarter ended September 27, 2025, there has been no change in the company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

PART II. OTHER INFORMATION

The company was not required to report the information pursuant to Items 1 through 6 of Part II of Form 10-Q for the nine months ended September 27, 2025, except as follows: