Model Update: MIDD Completes Midera Food Processing Spin-Off

研报英文原文证据摘录

Model Update: MIDD Completes Midera Food Processing Spin-Off

xcludes both residential and food

~$252m of debt and distribute $229m of cash to MIDD prior to separation, which we treat as processing

EPS excludes one-time items, amortization, and

a one-time increase to opening cash. We assume leverage declines to mgmt's ~2.5x YE2026 pension benefit.2025 / 2026 is pro forma EPS

target through earnings growth and FCF generation. Beyond 2026, we model ~4% organic growth, number excluding Food Processing.

consistent with mgmt's LT framework, and ~50-60bps of annual margin expansion (we remain

conservative until operational excellence initiatives demonstrate sustained productivity benefits).

Transaction Recap. MIDD completed the tax-free spin-off of Midera Food Processing on July 6.

MIDD shareholders received one share of Midera common stock for each MIDD share owned as of

the record date, resulting in ownership of two independent public companies.

Capital Deployment. Management expects to allocate free cash flow roughly 50/50 between share

repurchases and deleveraging, supporting the path from ~2.8x net leverage at separation to ~2.5x

by year-end 2026. While M&A remains part of the longer-term strategy, we expect near-term capital

deployment to focus on balance sheet improvement and shareholder returns. Over time, we believe

the company could also consider initiating a dividend as leverage declines and financial flexibility

increases.

Valuation. We adjust our PT to $160 following the spin-off based on the updated SOTP. We

assumed a 13.5x 2027E EBITDA multiple for Commercial Foodservice (a slight discount to high-

Stephen Volkmann, CFA * | Equity Analyst