MIDDLEBY Corp Q1 FY2025 Earnings Call

Good day, and welcome to The Middleby Corporation First Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event has been recorded. I would now like to turn the conference over to Mr. Timothy FitzGerald, CEO. Please go ahead.

Thank you for joining today's call. I'd like to begin by highlighting several key developments that underscore our commitment to driving shareholder value. As announced this morning, we've authorized an additional 7.5 million shares under our accelerated buyback program. We plan to deploy the vast majority of our free cash flow towards repurchasing shares, reflecting our confidence in the business. We believe our share price does not fully capture the strength of our business. By prioritizing share repurchases, we aim to bridge that gap and deliver superior returns to shareholders while maintaining our strategic growth investments. This decision follows our February 2025 announcement to separate the food processing business into a stand-alone public company, a strategic move designed to unlock value and sharpen our focus. Middleby's consistent operational excellence, strong cash flow generation, and disciplined capital allocation provide a sound foundation for this enhanced buyback initiative. The total authorized shares for repurchase represent 21% of our outstanding equity. Now as it relates to the separation of our Food Processing Group, we remain on track to complete the spin-off in early 2026. We are confident that creating a stand-alone food processing company will unlock significant shareholder value by enabling focused growth strategies and operational agility. As outlined in our February call, the creation of two market-leading but separate businesses will ensure greater strategic and operational focus at each stand-alone entity, allowing each business to implement and optimize capital structure and capital allocation policy to best support growth opportunities and enabling Middleby Food Processing with its best-in-class growth and margin profile to be valued in line with key food processing and industrial peers. We are excited about the prospects of Food Processing, as this business is poised for long-term growth as we continue to execute our strategy to be the supplier of choice with our full-line solutions enhancing the value delivered to our customers. And we see market expansion opportunities as we extend into attractive adjacent markets such as poultry, pet, and snack foods, leveraging existing competencies. In the coming quarters, we will provide more information on stand-alone financials, the leadership team, and cost structures. We also plan to have a dedicated shareholder day in the fourth quarter to present further details on the strategic road map and growth outlook for the food processing business as an independent entity. Now turning to tariffs. We are actively working to mitigate the cost impact of tariffs through targeted operational actions and pricing adjustments. Preliminary estimates of tariff-related costs are expected to increase our annual expenses by approximately $150 million to $200 million. We are highly confident in our ability to navigate this new challenge. And while we see the negative impact in the next several quarters, we anticipate our ongoing actions will offset these cost impacts by the end of the year. While we address the cost side of the tariff equation, we are heavily focused on leveraging the strength of our manufacturing footprint. The strength we believe provides us a competitive advantage and unique opportunity to gain market share in a number of key product categories. We fully expect to not only manage the current market dynamics but emerge stronger. Before I turn it to Brian, I would also like to reemphasize the strategic investments we have outlined and invested in over the past several years to drive sustainable long-term growth. We have been consistent and intentional through market disruptions to execute against our stated key priorities to accelerate the development of market-leading innovations and to transform our go-to-market sales strategies. We put these two strategic priorities in place several years ago, and we've been building an engine to drive sustainable long-term organic growth. Market conditions may be challenging, but we are better positioned than ever. Middleby is the established leader for the future trends of automation, ventless cooking, electrification, digital technologies, and IoT connectivity in the kitchen. This is the result of our execution of this strategy. And we have been strategic in our approach to identify and enter new complementary and attractive markets, including ice and beverage, which has broadened our addressable market, providing an expanded runway for growth. We're excited about the many new game-changing innovations we have delivered, which James has discussed with enthusiasm on many of our past calls. We are proud that many of these products have been recognized with recent industry awards. We see these innovations gaining traction with customers and interest broadening in the marketplace. While the pipeline takes time to develop, the future is bright. Along with our acceleration of innovation, we have made major steps in transforming our go-to-market capabilities from investments in innovation centers, establishment of leading culinary teams, launch of unique digital sales tools, and the creation of a dedicated sales team focused on marketing our industry-leading solutions. We have made strategic and incremental investments to recreate how we do business. This is all providing our customers a better experience from Middleby. We are at early stages of realizing benefits from these long-term growth strategies with recent wins and with more on the horizon. We're confident Middleby is better positioned than ever, and we are extending this leading position and is the reason we're confident Middleby is a great investment. Bryan, I'll turn it over to you now for further comments on the quarter and outlook.

Thanks, Tim. Looking back at Q1, we are pleased to have driven margins and generated strong cash flows. Operating cash flows of just over $141 million are our highest for a first quarter. Free cash flows were $107 million for the quarter and totaled $620 million for the trailing 12 months. Over the past two years, we have consistently demonstrated our ability to deliberately delever from 3x to a modest 2x today. Our balance sheet remains strong and our cash flows are resilient. After year-to-date open market stock repurchases of nearly $50 million, we are now substantially accelerating our share repurchasing. From a reporting standpoint, I want to call out that we have made a small adjustment in our segment's composition as discussed in the footnotes in our press release. We've moved one operating division from being part of the commercial segment into food processing. This change has an impact of around $10 million per quarter of revenue. We have restated all periods presented for this change. For Q1, we had growth in the Residential segment, strong cost control actions and managing leverage led to higher operating income and net earnings. Regardless of market conditions, we have delivered robust cash flows and driven margin performance. Our commercial foodservice business is seeing success, thanks to our investments in the ice and beverage platform, as well as chain wins with cooking and refrigeration brands. However, muted buying levels by our largest chain customers across a few of our brands are offsetting these wins. Nonetheless, margins expanded, benefiting from our continued cost control actions and favorable mix. Food Processing, after a very strong fourth quarter, having seen some customer-driven delivery delays in Q1 did see a drop in revenues. Given the lower volumes and some unfavorable mix, margins were challenged. However, we have near-term opportunities to engage directly with many customers at two very large trade shows in Q2, one focused on protein and one on bakery, which provide additional opportunities to improve the order trends. The Residential segment growth was primarily attributable to outdoor products. Margins held in well given the product mix and production levels. Looking forward, in commercial, we do acknowledge the challenging market conditions facing our largest chain customers and the resulting impacts on their buying decisions around our products. Nonetheless, we remain optimistic that over the year, we could see consistent sequential revenue increases as customers continue to adopt our leading technologies with rollouts and store build plans. Tariffs are impacting this business in a few ways. Positively, we have a strong U.S. manufacturing footprint compared to our competition and the geographies of our revenues and where we manufacture are generally aligned. Meanwhile, the level of Asian finished goods we import is negligible. Conversely, the associated uncertainty contributes to a continuation of marketplace dynamics where the spending level by customers remains rather muted, although there are some areas where we are seeing rollouts advancing. The biggest operational tariff challenge we face is around the cost of foreign source componentry mainly from China. We are implementing pricing actions to address this exposure as well as taking operational actions and continuing supply chain activities. Our current view is that the margin pressures in Q2 may likely grow in the back half of the year. We expect to have offset these higher costs by the end of the year. Our long-term outlook for this segment remains unchanged. Our leading innovative solutions address our customers' challenges. This will drive organic growth, strong margins, and increasing cash flow. For food processing, I do view Q1 as a bit of anomaly. We expect meaningfully higher revenue sequentially into Q2. Margins will also improve from Q1. These views are supported by the impacts of Q1 delayed deliveries, backlog levels, and order activity. For the full year, areas of stronger performance include snack foods and some protein product lines. Uncertainty around trade and consumer behavior creates delays in converting an opportunity into an order and then into revenue. This may challenge us to deliver growth for the year. But as with our typical pattern, margins should sequentially improve as we proceed through the year. The magnitude may be a little lower than in prior years, given revenue levels and tariff cost impacts. Looking beyond '25, we remain completely bullish on this segment. Our multibillion-dollar pipeline is as robust as ever. Our strengths will drive growth over the coming years. Our full-line solutions resonate with customers and provide strong returns on their investments. We are expanding our capabilities into growing markets of poultry, pet foods, and snacks. We provide automated and innovative products across our portfolio. We remain very well positioned to capitalize on the opportunities ahead. Lastly, residential may be the strongest performing segment this year. We are seeing stability and even potential growth in some of the premium indoor brands. Tariffs may have quite a negative impact on most outdoor products revenue. However, we continue to introduce new products across our brands and our geographies, a cautiously optimistic view these '25 revenues flat to the prior year. We are taking actions to maintain at least double-digit margins and realize that our views are highly dependent on consumer sentiment and spending so there certainly is some risk associated with this outlook. But overall, we have full confidence in our long-term outlook. We expect cash flows to remain strong. We will continue to deliver value to shareholders through our innovation, operational excellence, and significantly heightened share buyback levels. We've consistently demonstrated our ability to manage our business effectively, maintain a strong balance sheet, and preserve margins under challenging market conditions. We are leaders in innovation. Our solutions address our customers' pressing business challenges. The current environment makes it a little hard to predict the next two to three quarters, but our confidence in the next two to three years remains high. Thank you, and we will now take your questions.

Thank you. We will now begin the question-and-answer session. The first question comes from Walter Liptak from Seaport. Please go ahead.

Hi, thanks. Good morning everyone.

Good morning, Walter.

Thanks. Good morning, everyone. I wanted to ask about the 2025 sales guidance. You were previously at low-single digit, and you just provided segment guidance. I wonder what you're thinking about for the company in total. And then within the three segments, where you're seeing the biggest change? Is it food processing where the outlook has changed the most? Or is it in the CFS segment?

Thanks, Walt. It's Bryan. I'll take that one. Obviously, the full-year outlook is going to be mostly driven by commercial, given it being the largest segment. So I think based on what we're seeing today, even though as we think it improves over the course of the year, that keeps the expectations on the full-year mostly aligned with how commercial will turn out. A lot of the change in the outlook really is due to, I'll call it, the change in the macro and the change in the trade environment and what that is meant to uncertainty around consumer behavior, what that means to what our customers are seeing in the marketplace and their investment decisions. And so I do think that goes across to a certain extent, most of our segments. The dynamics are a little bit different in residential, where it's consumers making investment decisions as opposed to in commercial and food processing, right, where it is businesses making business decisions. But I think as well discussed in the general marketplace, right, uncertainty creates challenging times for people to make the investments. And so that is what's caused our outlook to maybe be a little bit more muted today than it was the last time we discussed results.

Okay. Great. When you consider everything, what are your expectations for revenue in 2025, especially in that area?

Yes. As I mentioned, we should see improvements throughout the year, but I prefer not to provide a specific estimate or a narrow range for the year. However, we anticipate that growth may be somewhat challenging in at least two of the segments, and this overall outlook will also apply to the entire company.

Okay. Got it. Okay. Thanks so much.

Thank you. The next question comes from Jeff Hammond with KeyBanc. Please go ahead.

Good morning. I would like to start by discussing the buyback decision. What influenced this choice? Is it a recognition that mergers and acquisitions are becoming less frequent or more challenging, or is it about understanding your company's valuation in relation to deals or focusing on return on capital? I would appreciate any additional insights. Thank you.

Yes, I would say it's a combination of various factors. First and foremost, we have been examining our valuation, which played a significant role in our decision-making last year. As I mentioned earlier, we truly believe our business is stronger than ever over the past few years. We have made significant progress in strengthening our portfolios, increasing innovation, and transforming our go-to-market processes, despite some challenging market dynamics. Additionally, we have seen growth in cash flows, and profitability continues to be strong. We believe the share price does not reflect this reality, which is one of the key reasons we view ourselves as the best investment available. Furthermore, our cash flows have compounded over time, and as Bryan noted, we have a robust balance sheet; we have intentionally reduced our leverage from 3x to 2x, putting us in a much better position financially. Our goal now is to deploy that cash toward our best investment opportunities. In terms of M&A, five out of our last six deals have been in food processing, which is where we see the most potential. As we've grown, we've identified differences in opportunities across our three segments, which contributed to our decision to separate. We believe that food processing will continue to offer significant M&A opportunities, while the other businesses are more mature. The investments made in our commercial and residential sectors have primarily focused on technology to support our organic growth initiatives. All these factors have influenced our current strategy, and we are very excited about the buyback. I hope this provides you with more clarity.

No, that's helpful. And then I guess with respect to tariffs and the tariff, I wanted to better understand, one, given your U.S.-centric footprint, where do you think there are the biggest opportunities for share gains and how quickly those can come through? And then conversely, I think the grills business has been a challenge, and I think most of that is sourced out of China. So what's kind of the risk in the short-term and the long-term strategy to kind of right the ship on the grill side?

Yes, I'll begin and then share some more thoughts. Even though we've announced a significant figure, which is more of a gross number, we are confident we will find a way to offset it. Our operational initiatives, particularly in supply chain management, are much stronger now compared to a few years ago. The overall strength of our manufacturing platform also contributes to this confidence. We believe that with a price increase, we are not facing a daunting challenge. We are very hopeful that by the end of the year, everything will balance out. Regarding the tariffs, we primarily operate as a U.S.-centric manufacturer, and we actually see them as an opportunity. We prefer that they remain in place since, in various product categories such as light-duty and countertop cooking equipment, we stand out among competitors who have moved production overseas. This gives us a competitive edge. We are investing in speed-cook technology, fryers, and induction cooking, and we are the only U.S. manufacturer of induction equipment in our coffee platform. Most of our competition is based in China, putting us in a good position. We anticipate benefits across numerous commercial and residential categories. We often highlight our U.S. manufacturing with pride, which is becoming increasingly significant. Now, regarding the premium outdoor market, we produce premium outdoor products in Greenwood, Mississippi. Over the past few years, we've consolidated several outdoor premium lines, such as Viking and Lynx, in this location, making our operations much stronger. Much of our competition originates from overseas, particularly China, which positions us favorably. We have action plans in place for our growth segments, similar to our competitors. Our team is actively addressing the impact of the tariffs, and while there may be a short-term market dynamic, I believe we will manage it as effectively as anyone. Some orders may face delays in the coming quarters, but we expect this will lead to pent-up demand toward the end of the year.

Okay. Appreciate the color, Tim.

Thank you. The next question comes from Mig Dobre with Baird. Please go ahead.

Thanks. Good morning. Maybe just some clarification around this tariffs figure, the $175 million at the midpoint. Is there a way to help us understand the allocation at segment level? What would this breakdown be between the three segments? And you talked about being able to offset these costs by year-end. So I'm kind of understanding this that into 2026, you expect this to be offset. But how do we think about these costs flowing through in Q2, Q3, Q4? Presumably, it takes a little bit of time before you can actually get to where you fully offset these costs?

Yes, I'm happy to address your question. Regarding the allocation of the $175 million across the three segments, it’s predominantly skewed towards commercial and residential, with less impact on food processing. I would estimate about 70% for commercial, 20% for residential, and 10% for food processing. The main difference is that commercial and residential sectors don’t source as many components from China, compared to food processing. To manage these costs, we’ve discussed several pricing actions. For the commercial segment, we’ve already announced a price increase effective July 1, which we’re currently implementing. We aim to time the increases thoughtfully to provide clarity to our customers and expect to successfully navigate pricing throughout the latter half of the year. Our track record over the past few years during inflationary periods gives us confidence in achieving this. We believe our supply chain is also better positioned now. The disruptions we've experienced in recent years have allowed us to adapt and prepare for further challenges. We’ve shifted a significant amount of our component sourcing to the U.S. compared to five years ago, reducing our reliance on China. Additionally, our facility in Nogales, Mexico has become a crucial in-sourcing option. Although tariffs exist on products coming from Mexico, they are considerably lower than those from China. Therefore, we've been proactive in relocating manufacturing from China to Mexico. With these pricing strategies, supply chain adjustments, and operational improvements, we're confident that we can mitigate the tariff impact and achieve a cost-neutral position by 2026.

That's helpful. In CSS, the cost headwind would be about 4% of sales. As you consider how to offset that, how much do you think is due to pricing versus the other cost actions you mentioned? I'm asking because you previously raised prices, which was straightforward, but the industry was in a different position back then. Currently, we are facing challenges with destocking and weak demand, making it hard to implement price increases. How much are you relying on pricing, and how confident are you that you'll be able to achieve that?

Yes. It's a very fair question, Mig. I think as we think about the impact of pricing just in terms of scale, I expect that the pricing we set forth on July 1 is going to be in the mid- to high single-digit range. So a predominant part of the coverage is going to come from pricing. And obviously, the rest of it is going to come from the operational and supply chain initiatives. I would say from a competitive landscape standpoint, from what we've seen so far, I think that puts us below the majority of our competitors. So even though it is another increase to your point on an already tough pricing spot. We actually think we're positioned better in a lower price point compared to our competitors. I do believe that the way I think we can be effective in getting the pricing through goes back to being very transparent in our approach, which I think is something we were effective with going back several years ago. Our customers are not ignorant to, hey, there is this tariff impact. They know that they're going to have to absorb a majority of it or a portion of it. It goes back to being transparent with customers on where the increases are coming from. And I think it's also transparent on, hey, if tariffs do go away, that we would adjust pricing accordingly to remain competitive in the marketplace. So I think if you take that approach and again, we've already started these conversations with the majority of our big customers that we feel like we can get the pricing through. I actually do believe to round it out even though the pricing is tough in the market that we're in, it still favors us more than, I think anybody because it puts more and more focus on we still have to solve for all the challenges the restaurants are facing with food costs, which are facing inflation again, labor continues to be a challenge, utility costs. And that ultimately still comes back to us as a solution to help solve for all of those things. So that would be my positive spend on even if costs continue to go up, I think they look to us to help solve those challenges that the restaurants continue to face.

That's helpful. And if I may squeeze one last one. When we're thinking about the revenue outlook based on what you know today, I know that in Q2 typically, we see a little seasonal bump relative to Q1 for the revenue, and I'm wondering if that's still reasonable to expect? And then relative to the second half, in your slides, you talk about the fact that new store openings for your customers are weighted to the second half of 2025. How reliant is your revenue on these new store openings? Or maybe put differently, how much risk do we have from store openings potentially getting pushed out into 2026 or some later date? Thank you.

Mig, it's Steve again. So I think Bryan called out sequential improvement that we believe will be in place second quarter over first quarter. So I don't know if I'd quite call it seasonality, but I do believe that second quarter sequentially will be above first quarter for commercial. Yes, new store openings, we've talked a fair bit about over the last several years. We get pretty regular updates from I'll call at least our top 25 chain customers in terms of new store openings by market, by country, et cetera. If you look at that list today of the top 25 chains we do business with and there are new store opening plans for this year, yes, there has been pushouts or pushouts last year. I think you'll see some ebb and flow still this year. But for the most part, they would all have in their build plans, but the remaining three quarters of development this year are net higher than the same period in the back half of last year. So they continue to reiterate that. Do I think there's going to be some push out here or there? Yes, I do. But I think by and large, the numbers they continue to give to us do reflect a year-over-year improvement in net development for the remaining three quarters of this year.

Great. Thank you so much.

Thank you. The next question comes from Tim Thein with Raymond James. Please go ahead.

Thank you. I'll keep this brief. I have two questions regarding commercial. First, about the mix benefit you mentioned that is supporting margins. I'm interested to know whether this is due to a channel or product mix, as product mix can vary quarterly. I'm also curious about the sustainability of this situation. Secondly, Steve, continuing from our earlier discussion on new store openings, it seems that a portion of that mix may be leaning towards international markets. Are you noticing this, and how is Middleby positioned if this observation is accurate, especially regarding new store growth predominantly occurring outside North America? Thank you.

Hey Tim, this is Bryan. I'll begin by discussing the mix and margins in Q1 for our commercial segment. It has positively impacted both our customers and products. We've found that certain businesses within our beverage platform have performed well due to the value they offer our customers. Additionally, across the various brands we have, there was a notable positive mix in customer segments, with some buying at higher levels this quarter.

And Tim, this is Steve answering your question about the international mix on new store openings. You are exactly right. If we categorize the new store opening pipeline for this year between domestic and international, it is definitely skewed toward international markets. It is probably around 75-25, maybe even 80-20 favoring international. We are seeing significant growth with some of the larger chains in various markets. Europe is performing well, and places like India and Brazil continue to attract these chains that are looking for new franchisees and market opportunities. I believe Middleby is exceptionally positioned for this. We have invested heavily in resources, both before and after sales, particularly in service, which is crucial in international markets for these chains. We have dedicated a lot of time, resources, and investment to Europe, the U.K., India, and the Middle East, aligning well with the growth we are witnessing among our largest chain customers.

Excellent. Thank you, Steve.

Thank you. The next question is from Tami Zakaria with JPMorgan. Please go ahead.

Hey, good morning. Thank you so much. So my first question is on the $150 million to $200 million impact you mentioned from tariffs, half of which is from China. Is that number based on the current 145% tariff rate. What I'm trying to understand is what the benefit or reversal could look like if that rate comes down to a more manageable level in the coming months?

Yes. The actual gross figure might be slightly higher than what we've outlined. We believe we've accounted for a bit of a reduction, estimating it could be anywhere from 20% to 40% lower when considering various countries, particularly China. This perspective led us to a range of 150% to 200%. However, this range might decrease further depending on the outcome of tariff negotiations. This is our assessment of the adjusted gross number.

Understood. Very helpful. And my second question is on the buyback. Are you expecting most of the free cash flow you're going to generate this year to go for buyback?

Yes. I mean I think the term we use in there is vast. So I mean I think really we are thinking about using essentially the entirety of our cash flow this year certainly will take a lot of other factors into consideration, but we're pretty committed to deploying most of our cash flow to the buyback.

Got it. Super helpful. Thank you.

Thank you. The next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.

Hey, good morning guys. Thanks for taking the questions. In Commercial Foodservice, I'm curious what competitive price increases that you have observed already in the marketplace in response to tariffs thus far and how those would compare to kind of the mid, high-single digit that you're planning on taking July 1st. I think you said you expect yours to be below, but I'm curious what you've observed already, if anything?

Yes, Brian, this is Steve. I'll start by noting that Middleby has a diverse range of products and brands, and our competitors span a broad spectrum. When the tariff news emerged earlier this year, we focused on building goodwill with our customers. We took a more cautious approach, aiming to provide as much certainty as possible during these uncertain times. That's why our price increase effective July 1st occurred later than many competitors. Many rushed to implement increases without sufficient data, which did not resonate well with customers. We have chosen to be more deliberate and backed our price increase with solid data to ensure transparency. Regarding the competitive landscape, our increase will be in the mid-single digit range, while we've observed competitors implementing increases ranging from 10% to 25%. Additionally, some competitors who source products directly from China are facing significant increases of over 25% or are exiting those product lines. This situation presents a substantial opportunity for us in the countertop, cooking, fryer, and oven segments. We believe we hold a competitive advantage both in pricing and by having our products produced in the U.S., avoiding reliance on imports from China.

Thank you for that, Steve. I'm interested to know if there are any specific details regarding China tariffs. We've heard that the Section 232 steel tariffs might override or be replaced by reciprocal tariffs from other companies. I understand your exposure is primarily on the component side, but is there anything investors should keep in mind about the differences between the reciprocals and the steel tariffs concerning the components?

I think we've reflected all those nuances, I think, in the range that we've given. So I guess that's kind of the first comment. There's a handful of strategies to minimize the impact, including different types of classifications, et cetera. And so I mean I think we have quite a few tools in the toolbox to mitigate the exposure that we see in China, including relocating out of China. But I mean, I think everything that relates to China, we've kind of embedded in all the comments I think that we've already got through here today.

Great. And then finally, I was just wondering if you could provide an update on any new Open Kitchen rollouts and maybe some of the new products featured at NAFEM that are gaining traction and that you're most excited about. I think a lot of the conversation focuses on tariffs when some of you got some exciting stuff going on in the base business?

Yes. So we continue to have good momentum on Open Kitchen. We do have a lot of good pipeline activity with Open Kitchen with some large chain customers. Obviously, I don't want to name names today, but we've got some good velocity behind us with activity, especially around really what I'll call the entire enterprise platform Open Kitchen, that's connectivity at the front of the house, the middle of the house, and with the back of the house connectivity with the connected products. Additionally, we are seeing a second order benefit, and we saw this in 2024, where we are winning rollouts because of connectivity. And so we had tens of millions of dollars of rollouts in '24 because our products were connected to Open Kitchen and that ultimately tipped us over the competition relative to winning that change. So a lot of great momentum with Open Kitchen in the marketplace. And remind me your second question?

The new products you're excited about from NAFEM?

Yes, we're really enthusiastic about our entire pipeline. Tim will discuss the Sizzling 7 at NRA, which we are launching in a couple of weeks. Many of our new products focus on beverages and beverage dispensing, and we've got strong support for those offerings. Additionally, we have innovations for holding chicken for extended periods, especially considering how hot the chicken market is in the QSR sector. We're particularly excited about our new torque fryer, which we believe will transform the frying industry forever by extending oil life from five days to over 30 days. We’re also gaining traction with the Invoq combi oven, and we’re rounding out our offerings with the introduction of gas versions, which will further boost sales. Lastly, the Blodgett induction oven features a unique multi-cavity impingement and convection on-demand platform, which we expect to succeed in the casual dining market. To sum it up, we are very optimistic about Open Kitchen and our new product initiatives.

Great. Very helpful. Thanks guys.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Timothy FitzGerald for any closing remarks.

Thank you, everyone, for joining today's call. I had planned to send out an invitation, and I think James did an excellent job highlighting the exciting innovations we have underway. We're extremely proud to have received seven kitchen innovation awards at the National Restaurant Show, which is the highest number for any manufacturer. I encourage everyone to come and see it. As James mentioned, we'll unveil the latest in automation and next-generation beverage technology, which are both exciting platforms for us along with everything related to digital advancements, including IoT. This is a significant growth initiative and a key part of the future for Middleby. The event runs from May 17th to 20th in Chicago, so hopefully, the invitation has been sent, and I look forward to seeing many of you there. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.