MIDD 10-K & 10-Q changes, risk factors and insider trading

The company’s operating results are impacted by the health of the North American, European, Asian and Latin American economies. The company’s business and financial performance, including collection of its accounts receivable, may be materially adversely affected by current and future economic conditions that may cause a decline in business and consumer spending, a reduction in the availability of credit and decreased growth of its existing customers, resulting in customers electing to delay the replacement of aging equipment. Higher energy costs, fluctuating interest rates, weakness in the residential construction, housing and home improvement markets, financial market volatility, inflation, recession, global hostilities and acts of terrorism, tariffs or changes in tariff policies have and may in the future also adversely affect the company’s business and financial performance. Additionally,For example, recent significant trade policy and tariff actions by the U.S. government and many other countries are have created significant uncertainty and potential risks for the company. The tariffs imposed to date have increased the cost of certain raw materials and components. 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 business, results of operations or financial condition. Furthermore, the company may experience difficulties in scaling its operations due to economic pressures in the U.S. and international markets.

The company’s currentCredit creditFacility agreement(as defined below) limits its ability to conduct business, which could negatively affect the company’s ability to finance future capital needs and engage in other business activities.

The covenants in the company’sCredit existing credit agreementFacility contain a number of significant limitations on its ability to, among other things:

Under the company’sCredit current credit agreement,Facility, the company is required to maintain certain specified financial ratios and meet financial tests, including certain ratios of secured leverage and interest coverage. The company’s ability to comply with these requirements may be affected by matters beyond its control, and, as a result, there can be no assurance that the company will be able to meet these ratios and tests. A breach of any of these covenants would prevent the company from being able to draw under the company'sCredit revolverFacility and would result in a default under the company’sCredit current credit agreement.Facility. In the event of a default under the company’sCredit current credit agreement,Facility, the lenders could terminate their commitments and declare all amounts borrowed, together with accrued interest and other fees, to be immediately due and payable. Borrowings under other debt instruments that contain cross-acceleration or cross-default provisions may also be accelerated and become due and payable at such time. The company may be unable to pay these debts in these circumstances.

The company's profitability has been and may in the future be adversely affected during any periods of unexpected or rapid increases in interest rates. The companyCredit maintains a revolving credit facility, which,Facility, at DecemberJanuary 28,3, 2024,2026, bore interest at 1.375% above Secured Overnight Financing Rate ("SOFR") plus a spread adjustment of 0.10% per annum. A significant increase in any of the forgoing rates would significantly increase the company's cost of borrowings, reduce the availability and increase the cost of obtaining new debt and refinancing existing indebtedness and/or negatively impact the market price of the company's common stock. For additional detail related to this risk, see Part II, Item 7A, "Quantitative and Qualitative Disclosure About Market Risk."

The company has a significant amount of goodwill and indefinite life intangiblesintangibles, which have in the past, and could sufferin lossesthe duefuture, become impaired and require us to assetrecord significant impairment charges.

The company’s balance sheet includes a significant amount of goodwill and indefinite life intangible assets, which represent approximately 35%28% and 18%,13%, respectively, of its total assets as of DecemberJanuary 28,3, 2024.2026. The excess of the purchase price over the fair value of assets acquired, including identifiable intangible assets, and liabilities assumed in conjunction with acquisitions is recorded as goodwill. In accordance with Accounting Standards Codification (“ASC”) 350 Intangibles-Goodwill and Other, the company’s long-lived assets (including goodwill and other intangibles) are reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of long-lived assets, the company considers changes in economic conditions and makes assumptions regarding estimated future cash flows and other factors. Various uncertainties, including continued adverse conditions in the capital markets or changes in general economic conditions, could impact the future operating performance at one or more of the company’s businesses, which could significantly affect the company’s valuations and could result in additional future impairments. Also, estimates of future cash flows are judgments based on the company’s experience and knowledge of operations. These estimates could be significantly impacted by many factors, including changes in global and local business and economic conditions, operating costs, inflation, competition, and consumer and demographic trends. If the company’s estimates or the underlying assumptions change in the future, the company may be required to record impairment charges that, if incurred, could have a material adverse effect on the company’s reported net earnings.

The company faces intense competition in the commercial foodservice,foodservice and food processing, and residential kitchenprocessing equipment industries and failure to successfully compete could impact the company’s results of operations and cash flows.

The company operates in highly competitive industries. In each of the company’s three business segments, competition is based on a variety of factors including product features and design, brand recognition, reliability, durability, technology, energy efficiency, breadth of product offerings, price, customer relationships, delivery lead-times, serviceability and after-sale service. The company has numerous competitors in each business segment. Many of the company’s competitors are substantially larger and enjoy substantially greater financial, marketing, technological and personnel resources. These factors may enable them to develop similar or superior products, to provide lower cost products and to carry out their business strategies more quickly and efficiently than the company can. In addition, some competitors focus on particular product lines or geographic regions or emphasize their local manufacturing presence or local market knowledge. Some competitors have different pricing structures and may be able to deliver their products at lower prices. Although the company believes that the performance and price characteristics of its products will provide competitive solutions for its customers’ needs, there can be no assurance that the company’s customers will continue to choose the company’s products over products offered by its competitors.

• general economic conditions;

•the lengthy, unpredictable sales cycle for the commercial foodservice equipment,equipment and food processing equipment and residential kitchen equipment groups;

• the gain or loss of significant customers;

• unexpected delays in new product introductions;

• unexpected changes in the levels of the company’s operating expenses; and

• competitive product offerings and pricing actions.

• difficulties in the assimilation of acquired businesses or technologies and the inability to fully realize some of the expected synergies or otherwise achieve anticipated revenues and profits;

• inability to operate acquired businesses or utilize acquired technologies profitably;

• the significant amount of management time and attention needed to identify, execute and integrate any acquired businesses;

• potential assumption of unknown material liabilities;

• failure to achieve financial or operating objectives;

• unanticipated costs relating to acquisitions or to the integration of acquired businesses;

• loss of customers, suppliers, or key employees; and

• the impact on the company's internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002.

The company may seek to expand or enhance some of its operations by forming joint ventures or alliances with various strategic partners throughout the world. For example, on December 4, 2025, the company announced that it had entered into a definitive agreement to sell a 51% stake in its Residential Kitchen business to an affiliate of 26North Partners LP, and the transaction contemplated by such agreement was completed on February 2, 2026. Entering into joint ventures and alliances also entails risks, including difficulties in developing and expanding the businesses of newly formed joint ventures, exercising influence over the activities of joint ventures in which the company does not have a controlling interest and potential conflicts with the company’s joint venture or alliance partners. The company cannot assure that any joint venture or alliance entered into or that may be entered into in the future will be successful.

• withdrawal from or renegotiation of international trade agreements and other restrictions on trade between the United States and China, the European Union, Canada, Mexico and other countries;

• uncertain impact on operations, suppliers and customers related to business disruptions in international jurisdictions;

• reduced protection for intellectual property rights;

• difficulties in staffing and managing foreign operations;

• potentially adverse tax consequences;

• limitations on ownership and on repatriation of earnings;

• transportation delays and interruptions;

• political, social, and economic instability and disruptions;

• labor unrests or shortages;

• potential for nationalization of enterprises; and

• limitations on the company’s ability to enforce legal rights and remedies.

As part of our previously-announced strategic review of our business portfolio as part of the Board’s efforts to maximize shareholder value, we have announced a plan to separate our Food Processing business through a spin-off into an independent publicly traded company, which is currently expected to be completed byin earlythe second quarter of 2026. Unanticipated developments could delay or prevent the proposed spin-off or cause the proposed spin-off to occur on terms or conditions that are less favorable and/or different than expected. Even if the transaction is completed, we may not realize all or any of the anticipated benefits from the spin-off. Expenses incurred to accomplish the proposed spin-off may be significantly higher than what we currently anticipate. Executing the proposed spin-off also requires significant time and attention from management, which could distract them from other tasks in operating our business. Following the proposed spin-off, the combined value of the common stock of the two publicly traded companies may not be equal to or greater than what the value of our common stock would have been had the proposed spin-off not occurred.

Because the company has a significant number of workers whose employment is subject to collective bargaining agreements and labor union representation, the company is vulnerable to possible organized work stoppages and similar actions. Unionized employees accounted for approximately 5% of the company’s workforce as of DecemberJanuary 28,3, 2024.2026. The company has union contracts with employees at its facilities in Windsor, California; Algona,Englewood, IowaColorado; Elgin, Illinois; Algona, Iowa; Easton, Pennsylvania and Lodi, Wisconsin that extend or extended through February 2027, DecemberApril 2026, July 2025,2028, JuneDecember 2026, May 2027 and December 2027, respectively. The company also has a union workforce at its manufacturing facility in the Philippines under a contract that extends through June 2026. Less than 1% of the company's workforce is covered by collective bargaining agreements that expire within one year. Any future strikes, employee slowdowns or similar actions by one or more unions, in connection with labor contract negotiations or otherwise, could have a material adverse effect on the company’s ability to operate the company’s business.

Additionally, as discussed further in our 2023 Sustainability Report,Report and 2024 and 2025 Sustainability Metrics Updates, accessible at www.middleby.com/sustainability, we have made commitments to reduce the environmental impact of our operations and provide sustainable solutions to our customers, including setting targets for reducing our Greenhouse Gas (“GHG”) emission and consumption of non-renewable resources. There can be no assurance that we will achieve our climate-related goals on the timeline anticipated or at all. Further, future events or circumstances could lead us to prioritize other business interests over progressing toward our current climate goals due to factors such as business strategy, economic conditions, regulatory changes or pressure from stakeholders. If we fail or are perceived to fail to progress toward achieving our climate-related goals and commitments or if our investors, customers or other stakeholders become dissatisfied with the level of GHG emissions produced by our production process or our products, we could face adverse publicity, which could have a material adverse impact on our business, financial condition and results of operations

In December 2021, The Organisation for Economic Co-operation and Development ("OECD") issued Pillar II model rules which would establish a global per-country minimum tax of 15%. The directive requires the rules to initially become effective for fiscal years starting on or after December 31, 2023. While it is uncertain whether the United States will enact legislation to adopt Pillar II, numerous countries have enacted legislation,legislation effective in 2024 and 2025, or have indicated their intent to adopt legislation, to implement certain aspects of Pillar II effective January 1, 2024, and the remaining global minimum tax rules by January 1, 2025.rules. The OECD and implementing countries are expected to continue to make further revisions to their legislation and release additional guidance.

•risks associated with the company's foreign operations, including market acceptance and demand for the company's products and the company's ability to manage the risk associated with the exposure to foreign currency exchange rate fluctuations and tariffs;

•the state of the credit markets, including mortgages, home equity loansmarkets and consumer credit;

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 byin earlythe second quarter 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.

TheIn 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. HighRecently 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'sReserve’s future interest rate policy decisions let to increased interest rates in 2023 and into the first quarter of 2024, which combined with global macroeconomic uncertainty, has and may continue to impact customer demand. Even in light of such headwinds, we remain focused on delivering strong financial results and executing on our long-term strategy and profitability objectives.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.distressed and uncertain given trade policy and tariff actions. The decreased availability of resources and inflationary costs have resulted in heightened inventory levels for certain components above current demand 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. Net sales in fiscal 2024 decreased by $161.4$91.9 million, or 4.0%,2.8%, to $3,875.2$3,150.2 million as compared to $4,036.6$3,242.1 million in fiscal 2023. Net sales increased by $29.7$27.5 million, or 0.7%,0.8%, from the fiscal 2023 acquisitions of Flavor Burst, Blue Sparq, Filtration Automation, Terry,Automation and Trade-WindTerry and the fiscal 2024 acquisitions of GBT, MaxMac, Emery Thompson, JC Ford, and Gorreri. Excluding acquisitions, net sales decreased $191.1$119.4 million, or 4.7%,3.7%, from fiscal 2023. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars in fiscal 2024 increaseddecreased net sales by approximately $0.5$3.1 million. Excluding the impact of foreign exchange and acquisitions, sales decreased 4.7%3.6% for the year, including a net sales decrease of 4.1%4.2% at the Commercial Foodservice Equipment Group, a net sales decrease of 1.9% at the Food Processing Equipment Group and a net sales decrease of 9.5%1.5% at the ResidentialFood KitchenProcessing Equipment Group.

GROSS PROFIT. Gross profit decreased to $1,470.4$1,251.8 million in fiscal 2024 as compared to $1,534.1$1,284.1 million in fiscal 2023, primarily driven by lower sales volumes at the Commercial Foodservice Equipment Group and Residential Kitchen Equipment Group. The impact of foreign exchange rates increaseddecreased gross profit by approximately $0.3$0.8 million. The gross margin rate was 37.9%39.7% in 2024 as compared to 38.0%39.6% in 2023.

•Gross profit at the Commercial Foodservice Equipment Group decreased by $52.3$53.1 million,million or 5.2%,5.3%, to $958.3$943.5 million in fiscal 2024, as compared to $1,010.6$996.6 million in fiscal 2023. Gross profit from the acquisitions of Flavor Burst, Blue Sparq, Terry, and Emery Thompson increased gross profit by $1.5 million. Excluding acquisitions, gross profit decreased by $53.8$54.6 million related to lower sales volume. The impact of foreign exchange rates decreased gross profit by approximately $0.7 million. The gross margin rate increaseddecreased to 39.6%, as compared to 40.1% in fiscal 2023. The gross margin rate, excluding acquisitions and the impact of foreign exchange, was 39.6%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses decreased to $762.5$590.1 million in fiscal 2024, as compared to $806.9$624.9 million in fiscal 2023. As a percentage of net sales, selling, general, and administrative expenses were 19.7%18.7% in fiscal 2024, as compared to 20.0%19.3% in fiscal 2023.

Selling, general and administrative expenses reflect increased costs of $8.9$7.8 million associated with acquisitions, including $1.6$1.5 million of intangible amortization expense. Selling, general and administrative expenses decreased $31.2$19.8 million related to combined compensation costcosts includingand commissions,share-based $12.3compensation, $12.5 million in professional fees, $10.3 million related to intangible amortization expense and $10.9$4.0 million in professionallower fees.commissions. Foreign exchange rates had a favorable impact of $0.3$0.5 million.

RESTRUCTURING EXPENSES. Restructuring expenses increaseddecreased $0.1$3.5 million to $14.2$8.2 million in fiscal 2024 from $14.1$4.7 million in fiscal 2023. Restructuring expenses in fiscal 2024 related primarily to headcount reductions and facility consolidations within all threeboth segments. Restructuring expenses in fiscal 2023 related primarily to headcount reductions and facility consolidations within the Residential Kitchen Equipment Group and Commercial Foodservice Equipment Group.

IMPAIRMENTS. In fiscal 2024, the company recognized non-cash impairment of $33.4$5.2 million primarily associated with several trademarks in the Residential Kitchen Equipment Group, as well as a few in the Commercial Foodservice Group in conjunction with diminution of values as we assessed recent market conditions and future business plans. In addition, the company recorded an impairment charge of approximately $5.2$5.3 million associated with the decline in recoverable value of an equity method investment. In fiscal 2023, the company recognized non-cash impairment of $78.1$2.0 million primarily associated with several trademarks in the ResidentialCommercial Kitchen EquipmentFoodservice Group in conjunction with diminution of values as we assessed recent market conditions and future business plans. See Note 3(f) to the Consolidated Financial Statements for further information on the annual impairment testing.

INCOME FROM OPERATIONS. Income from continuing operations increaseddecreased $21.3$8.3 million to $656.2$644.1 million in fiscal 2024 from $634.9$652.4 million in fiscal 2023. OperatingIncome incomefrom continuing operations as a percentage of net sales amounted to 16.9%20.4% in 2024 as compared to 15.7%20.1% in 2023. During fiscal 2024 and fiscal 2023, operatingincome incomefrom continuing operations included the impairment of intangible assets. Excluding the impairments, the decrease in operating income was primarily related to lower sales volume.

Income from continuing operations in 2024 included $194.8$139.4 million of non-cash expenses, including $55.6$39.8 million of depreciation expense, $64.4$57.2 million of intangible amortization related to acquisitions, $38.6$10.5 million of impairments and $36.2$31.9 million of stock based compensation. This compares to $254.5$150 million of non-cash expenses in the prior year, including $50.4$36.8 million of depreciation expense, $75.0$66.0 million of intangible amortization related to acquisitions, $78.1$2.0 million of impairments and $51.0$45.2 million of stock based compensation costs.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $92.2$93.4 million in fiscal 2024, as compared to $120.3$121.1 million in fiscal 2023, reflecting the decrease in net debt levels. Net periodic pension benefit (other than service costs) increased $5.8 million to $14.9 million in fiscal 2024, as compared to $9.1$9.0 million in fiscal 2023, related to thea decrease in discount raterates used to calculate the interest costcosts and an increase in expected return on assets as a result of the higher assets value. Other expense was $1.5$0.5 million in fiscal 2024, as compared to $4.2$4.3 million in fiscal 2023 and consists mainly of foreign exchange gains and losses.

INCOME TAXES. A tax provision of $148.9$145.1 million, at an effective rate of 25.8%,25.6%, was recorded during fiscal 2024, as compared to $118.5$123.1 million at an effective rate of 22.8%,23.0%, in fiscal 2023. The fiscal 2024 provision includes a $3.6 million net tax expense for the finalization of the 2023 tax returns as compared to the fiscal 2023 provision that included a net tax benefit of $7.0 million for the finalization of the 2022 tax returns. The effective tax rates in 2024 and 2023 were higher than the federal tax rate of 21% primarily due to state taxes and foreign tax rate differentials.

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 possibility that the proposed spin-off of Midera Food Processing, Inc. 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 of Midera Food Processing, Inc.; volatility in earnings resulting from goodwill and trade name 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 credit markets 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 2025 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.

In addition to tariffs, the company has been negatively impacted by inflation in wages, logistics, energy, raw materials and component costs.costs, including electronic controls and computer memory. 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. 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.

Three Months Ended AprilJuly 4, 2026 as compared to Three Months Ended MarchJune 29,28, 2025

Net sales for the three month period ended AprilJuly 4, 2026 increased by $109.3$78.7 million or 15.0%9.9% to $839.9$875.5 million, as compared to $730.6$796.8 million in the three month period ended MarchJune 29,28, 2025. Net sales increased by $7.5$23.8 million, or 1.0%,3.0%, from the fiscal 2025 acquisitions of Frigomeccanica and Oka. Excluding acquisitions, net sales increased $101.8$54.9 million, or 13.9%,6.9%, from the prior year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the three month period ended AprilJuly 4, 2026 increased net sales by approximately $14.6$3.9 million or 2.0%.0.5%. Excluding the impact of foreign exchange and acquisitions, sales increased 11.9%6.4% for the three month period ended AprilJuly 4, 2026 as compared to the prior year period, including a net sales increase of 8.1%8.3% at the Commercial Foodservice Equipment Group and a net sales increase of 25.0%1.3% at the Food Processing Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $52.8$50.0 million, or 9.4%,8.6%, to $615.5$630.6 million in the three month period ended AprilJuly 4, 2026, as compared to $562.7$580.6 million in the prior year period. Excluding the impact of foreign exchange, net sales increased $45.3$48.2 million, or 8.1%.8.3%. Domestically, the company realized a sales increase of $34.4$24.2 million, or 8.3%,5.9%, to $448.3$436.8 million, as compared to $413.9$412.6 million in the prior year period. The increase in domestic sales is related to an inflection in demand and higher volumes. International sales increased $18.4$25.8 million, or 12.4%,15.4%, to $167.2$193.8 million, as compared to $148.8$168.0 million in the prior year period. Excluding the impact of foreign exchange, the increase in international sales was $10.9$24.0 million, or 7.3%.14.3%. The increase in international sales is related to improved market conditions, primarily in the European and Latin American markets.

•Net sales of the Food Processing Equipment Group increased by $56.5$28.7 million, or 33.7%,13.3%, to $224.4$244.9 million in the three month period ended AprilJuly 4, 2026, as compared to $167.9$216.2 million in the prior year period. Net sales from the acquisitions of Frigomeccanica and Oka accounted for an increase of $7.5$23.8 million during the three month period ended AprilJuly 4, 2026. Excluding the impact of foreign exchange and acquisitions, net sales increased $41.9$2.8 million, or 25.0%,1.3%, at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $21.9$0.7 million, or 23.5%,0.8%, to $115.1$126.0 million, as compared to $93.2$125.0 million in the prior year period. Excluding acquisitions, the increase in domestic sales was $21.7$0.3 million, or 23.3%.0.2%. The increase in domestic sales is primarily driven by higher sales volumes of protein, bakery and protein products, partially offset by lower sales volumes of snack products. International sales increased $34.6$27.7 million, or 46.3%,30.4%, to $109.3$118.9 million, as compared to $74.7$91.2 million in the prior year period. Excluding the impact of foreign exchange and acquisitions, the increase in international sales was $20.2$2.5 million, or 27.0%.2.7%. The increase in international sales is primarily related to improvedhigher marketsales conditionsvolumes of protein and bakery products in the European andmarket, Latinpartially Americanoffset marketsby forfewer projects in the saleMiddle of protein, bakery and snack products.East.

Gross profit increased to $323.2$335.1 million in the three month period ended AprilJuly 4, 2026, as compared to $292.6$316.1 million in the prior year period, primarily driven by higher sales volumes. The impact of foreign exchange rates increased gross profit by approximately $5.6$1.4 million. The gross margin rate was 38.5%38.3% in the three month period ended AprilJuly 4, 2026, as compared to 40.0%39.7% in the prior year period, primarily impacted by tariffs, input cost inflation and product mix.

•Gross profit at the Commercial Foodservice Equipment Group increased by $14.1$13.7 million, or 6.1%,5.8%, to $246.4$247.9 million in the three month period ended AprilJuly 4, 2026, as compared to $232.3$234.2 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $3.0$0.8 million. The gross margin rate decreased to 40.0%,39.3%, as compared to 41.3%40.3% in the prior year period, primarily driven by tariffs, input cost inflation and product mix. The gross margin rate, excluding the impact of foreign exchange, was 40.0%.39.3%.

•Gross profit at the Food Processing Equipment Group increased by $16.4$5.8 million, or 26.9%,7.2%, to $77.4$86.7 million in the three month period ended AprilJuly 4, 2026, as compared to $61.0$80.9 million in the prior year period. Gross profit from the acquisitions of Frigomeccanica and Oka increased gross profit by $1.4$6.0 million. The impact of foreign exchange rates increased gross profit by approximately $2.6$0.6 million. Excluding the impact of foreign exchange rates and acquisitions, gross profit increaseddecreased by $12.4$0.8 million. The gross profit margin rate decreased to 34.5%,35.4%, as compared to 36.3%37.4% in the prior year period, primarily related to tariffs, input cost inflation and product mix. The gross margin rate, excluding the impact of foreign exchange and acquisitions, was 35.0%.36.6%.

Combined selling, general and administrative expenses increased to $188.3$186.6 million in the three month period ended AprilJuly 4, 2026, as compared to $161.8$167.6 million in the three month period ended MarchJune 29,28, 2025. As a percentage of net sales, selling, general,general and administrative expenses were 22.4%21.3% in the three month period ended AprilJuly 4, 2026 as compared to 22.1%21.0% in the three month period ended MarchJune 29,28, 2025.

Selling, general and administrative expenses reflect increased costs of $3.0 million associated with acquisitions, including $0.5$0.1 million of intangible amortization expense. Selling, general and administrative expenses reflect increases in combined compensation costs and share-based compensation of $12.6$10.3 million,million and strategic transaction costs of $6.5$8.9 million, partially offset by a decrease in professional fees of $1.7$2.4 million and commissionsa decrease in contingent consideration of $1.5$2.3 million. Foreign exchange rates had an unfavorable impact of $3.7$1.1 million.

Restructuring expenses increasedwere $0.3 million to $1.5$0.7 million for the three month period ended AprilJuly 4, 2026,2026 asand compared to $1.2$0.7 million for the three month period ended MarchJune 29,28, 2025. Restructuring expenses in the three month periodperiods ended AprilJuly 4, 2026 and June 28, 2025 related primarily to headcount reductions and facility consolidations within the Commercial Foodservice Equipment Group. Restructuring expenses in the three month period ended March 29, 2025 related primarily to headcount reductions and facility consolidations within both segments.

Interest and deferred financing amortization costs were $25.5$26.0 million in the three month period ended AprilJuly 4, 2026, as compared to $18.8$20.3 million in the prior year period, primarily reflecting the increase in interest rates. Net periodic pension benefit increased $0.9$0.8 million to $2.4 million in the three month period ended AprilJuly 4, 2026, as compared to $1.5$1.6 million in the prior year period, primarily due to a decrease in the discount rate used to calculate interest cost in the current year. Other income was $2.6$2.2 million in the three month period ended AprilJuly 4, 2026, as compared to other expense of $1.0$2.1 million in the prior year period. The change was primarily driven by income of $1.8$2.7 million in the current yearperiod related to the change in fair value of the note receivable and $1.5 million of lower net foreign exchange losses.receivable.

A tax provision of $27.6$43.3 million, at an effective rate of 24.5%,34.2%, was recorded during the three month period ended AprilJuly 4, 2026, as compared to a tax provision of $26.2$25.4 million at an effective rate of 23.5%,20.0% in the prior year period. During the three month period ended AprilJuly 4, 2026, the effective tax rate was higher than the prior year period primarily due to andiscrete increasetax initems non-deductiblerelated expenses.to certain internal restructurings associated with the Spin-off and other foreign discrete tax items. The effective tax rate for the three month period ended April 4, 2026 was higher than the U.S. statutory tax rate of 21%21.0% primarily due to non-deductible expenses, state taxes and foreign tax rate differentials.

(Loss)/EarningsEquity fromin DiscontinuedLosses Operations,of Affiliate, Net of Tax

LossEarnings from discontinued operations, net of tax, waswere $135.4$0.6 million in the three month period ended AprilJuly 4, 2026, as compared to earnings from discontinued operations, net of tax, of $7.3$4.3 million in the three month period ended MarchJune 29,28, 2025. During the three month period ended April 4, 2026, the company recorded a pre-tax loss on disposition of $94.9 million. Prior year results include activity for the fullentire reportingResidential period,Kitchen Equipment Group, whereas current period results only include activity throughassociated thewith closelimited distribution operations in certain international locations that have not yet transferred to Composition Brands as of theJuly Residential Transaction on February 2,4, 2026. See Note 9 to the Condensed Consolidated Financial Statements for further details.

Total cash and cash equivalents decreased by $45.1$63.0 million to $177.1$159.2 million at AprilJuly 4, 2026 from $222.2 million at January 3, 2026. Total debt decreased to $1.9$2.0 billion at AprilJuly 4, 2026 from $2.2 billion at January 3, 2026.

Net cash provided by operating activities - continuing operations after changes in assets and liabilities amounted to $187.5 million as compared to $229.0 million in the prior year. During the threesix month period ended AprilJuly 4, 2026, working capital changes impacted operating cash flows primarily driven by increased inventory levels of $40.6$51.7 million due to increased sales and inflationary increases in costs, an increase in prepaid expenses and other assets of $27.1$38.4 million due to impacts from the timing of tax payments and status of over-time revenue contracts, an increase in accounts receivable of $32.2 million due to higher sales volumes, an increase in accounts payable of $10.6$19.8 million and ana increasedecrease of $3.2$41.6 million in accrued expenses and other liabilities, including impacts from the timing of payments made for taxes, various customer programs and incentive programs.

During the threesix month period ended AprilJuly 4, 2026, net cash provided by investing activities - continuing operations amounted to $556.5$544.9 million. This included $564.6 million in proceeds received from the Residential Transaction, net of cash transferred. Cash used to fund acquisitions and investments amounted to $0.1$1.1 million.million, which included payment of $0.9 million for the finalization of the working capital provision provided by the purchase agreement for a prior year acquisition. Additionally, $7.9$18.6 million was expended, primarily to upgrade production equipment, manufacturing facilities, and investments in innovation centers.

Net cash flows used for financing activities amounted to $787.5 million during the six month period ended July 4, 2026. The company’s borrowing activities during 2026 included $419.1 million of net repayments under its Credit Facility. Additionally, in 2026 the company repurchased $374.8$575.8 million of Middleby common stock shares. This was comprised of $365.9$565.9 million used to repurchase 2,385,4053,793,467 shares of its common stock under a repurchase program and $8.9$9.9 million to repurchase 56,23362,107 shares of Middleby common stock that were surrendered to the company for withholding taxes related to restricted stock vestings.

At AprilJuly 4, 2026, 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.

Management's discussion and analysis of financial condition and results of operations are based upon the company's Condensed 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 Condensed 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, pensionspension benefits, and income taxes, as discussed in the company's Annual Report on Form 10-K for the year ended January 3, 2026 (the “2025 Annual Report on Form 10-K”), except for the adoption of new critical accounting policies pertaining to equity method investments and note receivables, which were implemented in connection with the Residential Transaction completed during the current year, as discussed in Note 4 to the Condensed Consolidated Financial Statements.