The Middleby Corporation (NASDAQ:MIDD) Q3 2024 Results Conference Call October 31, 2024 11:00 AM ET
Company Participants
Tim FitzGerald - CEO
James Pool - Chief Technology Officer & Chief Operations Officer
Bryan Mittelman - CFO
Steven Spittle - Chief Commercial Officer
Conference Call Participants
Saree Boroditsky - Jefferies
Mig Dobre - Baird
Brian McNamara - Canaccord Genuity
Jeff Hammond - KeyBanc Capital Markets
Tami Zakaria - JPMorgan
Walt Liptak - Seaport Global
Operator
Good day, and welcome to the Third Quarter 2024 Middleby Corporation Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions] after today’s presentation, there will be an opportunity to ask questions. [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.
Tim FitzGerald
Good morning. Thank you for joining us today on our third quarter earnings call. As we begin, please note there are slides to accompany the call on the Investor Relations page of our website.
Third quarter proved to be more challenging than expected, particularly for our Commercial Foodservice segment as lower restaurant traffic and a reacceleration of already high food costs in recent months further pressured restaurant operators, resulting in a delayed investment in greater restaurant closures. Although we faced macroeconomic headwinds across our foodservice businesses, the picture remains strong as more favorable conditions return with pent-up demand and expected multiyear recoveries for the industries in which we participate.
While we faced revenue declines in the quarter, our profitability initiatives continued to take hold as we posted strong margins across our businesses, and we reported margin expansion in comparison to the second quarter. We are also pleased to have reported another very solid quarter in operating cash flow, with year-to-date cash flow of $447 million, roughly 20% ahead of a record 2023.
Given the strong cash flows generated by our business we have rapidly reduced our leverage, which has declined from 2.7 times a year ago to just over 2 times at the end of the third quarter. Our balance sheet is strong, allowing us to capitalize on market opportunities as they arise. And we continue to make critical investments in strategic and operational initiatives positioning us for the future.
At our Commercial Foodservice business, gradual improvement in ordering levels we saw throughout the first half, dropped off as we progressed through the third quarter. Restaurant traffic, which was anticipated to improve at many of our customers in Q3, declined by reported 3.5% across the restaurant sector for the quarter. At the same time, food costs, which have been improving throughout 2023, saw a reacceleration of cost increases in recent months. These factors slowed execution against our customers' business plans and ordering of equipment for upgrades and new store openings.