The Middleby Corporation (MIDD) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Middleby Corporation's Second Quarter 26 Earnings Conference Call. All participants will be in listen only mode. On today's call are Timothy J. FitzGerald, CEO and Brittany Cerwin, CFO. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Timothy J. FitzGerald. Please go ahead.

Good morning, and thank you for joining today's call. Darcy last year, we set out to separate our 3 leading foodservice into independent companies. To best position each business for long-term growth, and to unlock value for all of our shareholders. We completed the first step in Q1 of this year. Selling a controlling stake in the residential kitchen business to 26 North. And on July 6th, we completed the spin off of our food processing business, launching MDF as a separately publicly traded company. MDF now as a standalone business is extremely well positioned as a best in class leader in the growing food processing equipment industry. We are confident that business and the MDF team have a very bright future ahead. With that, the transformation is complete. I am proud of how our teams work together and in the execution. Is a significant milestone and achievement in the history of our company. In parallel with our business transformation, we returned $1.3 billion to shareholders through repurchases. Including $200 million in the second quarter reducing our outstanding share count by 16% over the past 6 quarters. We are very pleased with the strategic allocation of capital that we believe has delivered substantial value to our shareholders during a pivotal time. We are now embarking on a new, exciting chapter for Middleby. Middleby now moves forward as a focused solutions provider and as the innovation leader in commercial food service. We are extremely well positioned with our leading brands best in class innovations and momentum in equipment categories that deliver the highest ROI for our customers. The strategic investments we have made in our business are gaining traction, and we are seeing the benefits in our top line. We continue to set the pace in the industry. Bringing next generation solutions that have practical application and meaningful impact to our customers. Our go-to-market strategy that has been underway for the past several years has put us closer to our customers than ever before. And we are viewed as a strategic partner. Our more recent investments in our operations are at early stages but are starting to take hold. And we are confident these initiatives will drive margin expansion and operational excellence over the next several years. Taken together, these investments are what underpin the 3-year targets we have laid out at our Investor Day in May. Net sales organic growth of 3% to 6% adjusted EBITDA growth of 6% to 9%, and adjusted EPS growth of 10% to 15%. We are confident in our ability to deliver against these targets. Turning to our Q2 results for Commercial Foodservice, the quarter reflected strong execution against our strategy as we delivered over 8% organic revenue growth. This marked the second consecutive quarter of organic sales growth in a challenging macro backdrop, a trend we expect to continue in the third and fourth quarters. Also represented the second largest quarter for revenue in the history of Middleby Commercial Foodservice. The growth in the quarter was broad based as we saw strength across channels and customer types, including with our chain customers and also in the general market with our dealer partners. We were pleased also to realize growth across geographies, with increases in both North America and international. We continue to make inroads on the back of our go-to-market investments and new product innovations, and we are seeing the benefits of targeting newer markets including ice and beverage. Where we have an even greater pipeline geared towards next year. The current industry backdrop is not ideal however, Middleby has continued to drive year over year organic revenue growth. Turning to our second half outlook, industry conditions remain challenging particularly with traffic at the QSR segment and customers are being more selective on their capital plans for the back half of the year. Within that, we are seeing replacement spend stable relative to our prior thoughts. With unit growth being pushed out modestly by some larger chains. That said, we are carrying momentum into the second half with global chains and we have visibility into the pipeline of opportunities into 2027. This momentum gives us confidence to raise our revenue guidance expectations for the second half of the year. We also saw year over year EBITDA growth in the quarter, although our margin percentage was below our expectations driven by a few key areas. The revenue growth included better than expected strength in our ice and beverage platform, which has margins approximately 400 basis points lower than our longer established cooking platform. Additionally, inflationary costs, particularly ocean freight shipping and steel surcharges, accelerated faster than anticipated driven by the recent broader macro. Our investments in the ICE and Beverage platform weigh on margins in the near term as we ramp production for new product launches to support 2027 customer demand in the pipeline. Although we anticipate these margin pressures to persist through the second half, we expect to see sequential margin improvements in both the third and the fourth quarter. We have a number of operating initiatives currently in progress including product simplification, lean manufacturing, and mixed profitability. While these are longer term initiatives, they will partly offset recent accelerated inflationary pressures and support sequential improvement in margins ahead of larger benefits as we move into 2027. In addition, we are confident of increased margins at our ICE and beverage platform, particularly as we move beyond the initial investment phase in 2026. We are excited about this new chapter for Middleby. With the portfolio transformation now behind us, we will benefit from greater focus on the execution of our strategic plans, both top line and bottom line, team has a lot of momentum and we are looking forward to accelerating it. With that, now turn it over to Brittany to discuss our financial performance in greater detail guidance for the third quarter and full year.

Thanks, Timothy. Today's conversation will be focused on commercial food service. Given the spin off of MDF did not occur until July 6, food processing results are included in our continuing operations for Q2. For details on food processing, we invite you to join MDF's inaugural earnings call on Thursday, August 13th. Turning to the results for Commercial Foodservice second quarter revenues were approximately $631 million driven by organic revenue growth of 8.3%. As Tim mentioned, positive impacts were broad based and seen across all channels and both domestically and internationally. Organic adjusted EBITDA margins were 25.8%. In terms of margins, Timothy laid out the drivers to our second quarter results. And the implications for the remainder of the year. During the second quarter, we experienced a total margin headwind of nearly 100 basis points which is driven by the higher than expected inflationary impact partially offset by the benefit of a tariff refund of $5 million For the remainder of the year, we expect an incremental inflationary margin pressures of approximately $10 million to $15 million relative to our prior expectations. From a margin percentage perspective, we expect sequential improvement in the back half as we begin to benefit from the operational improvements Timothy laid out including product simplification, mix, and lean manufacturing. On a consolidated basis, total company adjusted EBITDA for the second quarter was approximately $193 million and adjusted EPS from continuing operations was $2.35. Adjusted EPS expansion was achieved primarily through organic EPS growth, 2026 share repurchase activity, Share repurchases utilizing the proceeds from the residential transaction and carryover from 2025 share repurchase activity. This was offset by increased interest costs associated with the maturity of our convertible notes and a higher tax rate associated with discrete foreign tax items and nondeductible expenses as compared to the prior year. Adjusted EPS excluding food for the second quarter is estimated to be $1.74 as compared to the prior year of $1.40 This presentation of adjusted EPS is aligned with how we expect to report Middleby results on a post spin basis with food processing as discontinued operations starting in the third quarter. Please refer to Slide 11 of the presentation we have posted online for a complete adjusted EPS bridge for the second quarter as reported and Slides 17 and 18 for post spin adjusted EPS bridges for Q1 and Q2. Second quarter operating cash flow was approximately $100 million and free cash flow was approximately $89 million Our leverage ratio per our credit agreement at quarter's end was 2.4x. At spin, our estimated pro forma leverage ratio was 2.7x. As stated at our Investor Day in May, we expect to delever to approximately 2.5x by the end of the year, and anticipate debt pay down will be the primary use of excess capital in the second half of the year. Regarding capital allocation during the second quarter, we repurchased 1.4 million shares or approximately 3% of our outstanding shares for $200 million at an average purchase price of approximately $142 per share on a pre spin basis. Let me walk you through our third quarter and full year outlook, starting with the third quarter. For the third quarter, on a post-spin, total company basis, we expect to achieve the following. Revenue of $620 million to $640 million equating to organic revenue growth of approximately 4% adjusted EBITDA is forecasted to be between $143 million and $150 million Adjusted EPS is projected to be in the range of $1.67 to $1.83 assuming approximately 45.2 million weighted average shares outstanding. For the full year, on a post-spin total company basis, we expect to achieve the following: revenues of $2.48 billion to $2.53 billion equating to organic revenue growth of approximately 7% adjusted EBITDA of $572 million to $588 million Adjusted EPS is projected to be in the range of $6.73 to $6.89 assuming approximately 45.8 million weighted average shares outstanding. Please refer to Slide 14 and 15 of the presentation we have posted online at our Investor Relations website for full details. That concludes our prepared remarks, and we are now ready to take your questions.

We will now begin the question and answer session. To ask a question, If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press * then 2. We will pause momentarily to assemble our roster. The first question comes from Jeffrey Hammond with KeyBanc. Please go ahead.

Hey, good morning. So, growth has been, you know, quite impressive, year to date. I mean, the macro still seems pretty choppy. You do have kind of a step down, and I am just wondering if you know, it is less easy comps or if, you know, the first half had, you know, more kind of program, maybe beverage wins in there, just a little more color on the cadence.

I think last year, we talked about the double digit growth from our dealers. So we still see, you know, strength across the market, and Steven can chime in on both dealers as well as chains, but there was some you know, we are not expecting the continued double digit growth at the dealers. So I think we see it moderating in the back half of the year, but we still have momentum and robust demand as I mentioned, kind of in the opening comments.

Yeah. I would just build on that. This is Steven. I mean, the growth we have seen within our dealer channel has been pretty much sustained for the last 4 quarters now. And even though, as Timothy said, the comp is tougher for the back half of the year, we still expect growth within the dealer channel. So that is really the primary difference. We are seeing, and it is what we saw in the first and second quarter, your pickup has really been within the chain space, specifically the QSRs. A large portion of that has been driven by, you know, new product adoption as they look to expand menus, expand dayparts, and certainly beverage and ice, as we have commented on before, has been a big driver within that space, and we expect that to continue in the back half of the year. And that is actually where the predominant portion of growth we expect comes in the third and fourth quarter.

Okay. Great. And then, yeah, I understand a lot of kind of inflation pressures. Can you just speak maybe unpack what really drives the sequential margin improvement? Is that you know, is there any mix in there? Is it just getting this price through? And then are you contemplating any additional 301 tariff refunds next?

Sorry. This is Brittany. I can comment on that. First, in regards to the 301 tariffs, we mentioned $5 million in the second quarter. And we expect a similar dollar range of about $5 million potentially in the back half. To be received. As for the step-up that we are expecting. As it relates to the sequential margin, as we go from second quarter and into the back half I think that is a mix of a few items. We are expecting a little bit of mix improvement So in the second quarter, as it relates to mix and as we mentioned, new product innovation and the launching of manufacturing around the new beverage equipment. That was a headwind in the quarter to margins. Of about a 150 basis points, which we will start to see reduce a little bit as we get into the back half. Along with some improved mix The pricing that we have mentioned primarily will not start to benefit us until the fourth quarter. So that is why we are kind of expecting some sequential as we move from Q2 to Q3 to Q4 improvement. Along with the operating initiatives that Timothy commented on. In the prepared comments.

Yeah. Jeffrey, I would just say, you know, we obviously laid out at Investor Day a lot of the new capabilities that we have built up over the last year plus. Very similar to what we have done innovation, go to market. So you can see that taking hold on the top line. A lot of the operating initiatives that are in flight so we really are just starting to get traction, we think, in the back half of the year. So we feel like we have got pretty good line of sight to that 200- to 400-basis-point improvement that we talked about. You know, Investor Day. But we are at the very early stage of that, some of that will bake in to the year as it as we kind of progress, particularly in the fourth quarter. Okay.

Thank you. The next question is from Timothy Thein with Raymond James. Please go ahead.

Great. Thank you. Good morning. Just to come back, Brittany, on the comments on, I think you mentioned earlier, $10 million to $15 million of incremental costs that you had not foreseen I guess, 90 days or so ago. Is the how are you expecting the yield on that the pricing, how that plays through, and how much and then that is some offset presumably that you are expecting. And I guess a lot of that comes in the fourth quarter, but I guess that is part 1 of the question. The second is just thoughts around the pricing strategy as you go into 2027. I think, you know, normally, those pricing actions are taken around the start of the year. Does this kind of adjust that or alter that potential strategy as you look into next year?

Yeah. So I will start with a little bit on the margin headwind. So as we wrapped up the first quarter, obviously, we had some inflation. And as we sit here 90 days later, that inflation has accelerated, and that is what we have anticipated here in the back half of that incremental $10 million to $15 million. When we put in the pricing, obviously, that is general market pricing, which has to be announced well ahead of the 8/1 effective date that we had. So that was really to start to partially offset the cost and inflation that we are seeing at that time. So and as mentioned, we will start to see some of that benefit roll through on the pricing in the fourth quarter. So it will be a headwind for us on this inflation. Into Q3 and some of Q4 as well.

Okay. And then you know, ice and beverage called out a couple times. I and I think maybe, Timothy, as you were going through the initial comments, you mentioned just more of a pipeline building, and I think you mentioned that into kind of more that hits in 2027 on top of that. Any I know we touched on a lot of this at the Investor Day, but, I mean, is the size of that pipeline as you think about contribution to what that can mean for 2027? Any further clarity on that in terms of you know, meaningful that could be?

I do not-- yeah, I do not think we are gonna lay out the magnitude in terms of top line, but I would say it is, you know, just positive. Right? Like, I mean, I think that is an a big addressable market that we have identified. We have made a lot of investments. We continue to make those investments. We have got momentum. it is part of know, the revenue growth that we are seeing now. And there is more to come because we have new products that we are launching going into 2027. Those are some of the investments we are making right now. The size of that pipeline has been expanding a bit ahead of some of the products that we will be launching next year, and those are some of the continuing investments that we are making right now. So but, I mean, I think that gives us, you know, confidence in our growth outlook and algorithm for the next several years because ice and beverage will continue to play a part of it. Got it. Alright.

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

Hi, good morning. Thank you so much. My first question is organic growth. Can you clarify what your organic growth outlook is for CFS? I think when you started the year, you said 4% to 6%. I am guessing it is now higher, more like 6% to 7% or whatever. So can you clarify what that number is for the year? And within that number, how much is driven by price versus volume? And is there any headwind embedded in terms of from the product line simplification initiative that you spoke to. So if you could parse out the organic growth outlook for CFS, that would be helpful.

Yeah. I can speak, Tami, to the full year guidance that we have given for commercial foodservice that has now increased. To be between 6% to 8% for the full year.

Yeah. Tami, this is Steven. I in terms of the price volume dynamic, the predominant driver this year has been on volume. You know, we have we took some, low single digit pricing towards the end of last year, into the beginning of this year, we just put forward, as Brittany talked about, another, low single digit in general market in early August. But the predominant driver is on the volume side And, that is coming through a lot of new product adoption from our chain customers. that is what gives us the confidence, and that is volume versus price. In terms of the product line simplification, that we highlighted at the Investor Day, we are certainly still early days in that process, so really have not seen or do not expect much of a headwind from a top line volume perspective. The rest of this year. Understood. that is very helpful.

And second question is on tariffs. I wanted to clarify your tariff headwind is now expected to be, it seems, $77.5 million for the full year. Net of the additional increases and reductions under Section 301 that you called out, So can you clarify how much of that $77.5 million is already absorbed in Q1 and Q2, and how much is expected in Q3 versus Q4?

Sorry. With regards to that, the range that you provided, that is our gross tariff exposure as we look at the commercial foodservice business on a continuing basis. As we look to kind of the spread between the quarters, I would say it is pretty-- it is starting to be more evenly split between the first half and the second half. Obviously, we are gonna have a little bit of a step up, as we mentioned, with the new 301 tariff. That will start here towards the later part of the second half. But that is the $2.6 million annualized is an annualized number. That will start here in the back half of gross exposure on those. Understood.

Thank you. Again, if you have a question, please press *. The next question is from Ian Zaffino with Oppenheimer. Please go ahead.

Hi. Great. Thank you very much. I want to just drill down a little bit more to QSR growth. You know, I know that you mentioned that there is been some menu changes, but you know, is there demand coming from anywhere else? Like, are you starting to see like, a replacement cycle yet or at least the start of a replacement cycle? I know the age of the plant is quite old and quite past replacement. So wonder if you are seeing anything there. Thanks.

Yeah. Thanks, Steven, and good morning. it is Steven. As I think about we think about, you know, QSR segment and the key drivers for demand, I will bucket it maybe into 3 different areas of where, you know, demand comes from. So, historically, you have new store opening growth, which has been relatively flat year over year this year. Do have pretty good visibility to that pipeline, into next year, which chains are expecting growth, but we also know there is been ebbs and flows of push outs there. So second area is what you just highlighted is the replacement demand, which has, we feel like, been muted over the last, really, 5 to 7 years, and we feel like there is a pent up, you know, demand replacement demand cycle that is coming. We have seen that pick up as this year has gone forward. I would not say it is quite off to the races, but compared to where we were a year ago, we have seen chains start to go back and replace their aging equipment. But, really, the third bucket is where we have seen the growth this year and really where we would expect the growth to continue to accelerate next year. And that is within your new product adoption for additional menu items, driving dayparts, we talk a lot about beverage And ice, but anything that is helping them fuel throughput, consistency, labor efficiency, in new products. that is really been the primary driver this year and into next year within the QSR space. Okay. Thanks. And then just on international, can you maybe just talk about the growth there? How much of it is just deeper penetration? How much of it is more of these, like, you know, very innovative products like, you know, KFC Quench or something along those lines. You know? So how much is something like that? Or in that bucket be driving that? And then just given the success that you have had in that area, what should we expect as you maybe kind of bring some of those solutions to the US? Thanks. Yeah. Great question. Thanks for highlighting international. We have in all international markets over the last several years, we have reinvented, our teams, our processes. We have opened innovation kitchens, across the world. You know, I would highlight you know, I think 1 of the biggest changes, I will maybe call it Europe specifically, but it is really true of all of our international markets. Is historically, we only sold a handful of our portfolio within international markets. So it is very heavy in fryers, very heavy in heavy in ovens, and it was very focused on large global chains. So our global chains are going to continue to grow in international markets, and we are very well positioned to grow with them. But, really, the biggest change that is happening in real time is selling the broader portfolio. And it really is selling the technology brands. it is moving beyond just fryers and ovens, but selling a complete Middleby package that now includes areas like beverage and ice. So that really is the biggest I would say, step change we have seen in our international markets is selling the complete portfolio not just relying on global chains, but by selling a complete solution, you can obviously penetrate into, you know, more emerging chains and local markets and really just those local customers. So that is the primary driver that we have seen, and we will expect that to continue certainly in the next year within pretty much every international market that we are in today. Okay. Thank you very much. Appreciate the color.

The next question is from Mircea Dobre with Baird. Please go ahead.

Good morning, guys. This is Peter Kalimkaryian on for Mircea this morning. Thank you for taking my questions. Timothy, you mentioned initiatives in ice and beverage, and I appreciate it. and Brittany, the commentary on the 150-basis-point drag from investment there in the second quarter. Is there any detail you could provide on the specific initiatives that you have ongoing in that and the timeline for some of these investments to come online?

Yeah. Great question. So we have highlighted a lot of the new products that we have been launching, particularly products such as the Fizz, which is kind of our automated beverage machine, gravity, which got a lot of interest from customers. Those are ramping in terms of production. So we are actually bringing up a facility in the back half of this year. We do have significant customer interest, and there are tests going on. So we are investing not only in the production, but in testing and product approval. So we see a lot of that coming online kind of right at the tail end of the year, really not impactful to this year, but starting to become impactful in 2027. Thanks for that, Timothy. And I guess the follow-up here on beverages as we think about 2027. You know, what is the right way to think about that 400-basis-point margin gap? Does that close significantly, or is that more of a longer term story? I think it will close over time. And we will first start to move past the investment stage, which, I think, you know, we will start gaining traction or kind of move into revenue in 2027. And then kind of along with that, we have got a lot of operating initiatives are across the entire platform with all the beverage companies and the ice companies because, you know, that is a big part of the story as well. We have we have acquired some new companies there. We are consolidating the platform. And certainly benefiting from lean manufacturing, SKU simplification that some of our larger brands. So we see that kind of continuing to gain momentum including in the latter stages of this year and then kind of expanding as we go through 2027 and 2028 as part of the 3-year plan. But I will just kind of, you know, underline again those initiatives are underway. So lot of the capabilities we have built over the last 12 to 18 months, a lot of the initiatives were really started at the back end of last year. So that is kinda why we feel like we have got a high degree of confidence in line of sight of those gaining momentum particularly as we go into next year. Great. Thanks, Timothy.

The next question is from Christopher Senyek with Wolfe. Please go ahead.

Yes. Hi, good morning. Great quarter. So, kind of following on the margin opportunity in ice and beverage. Yeah, I know structurally it is it is lower than the hot side of the business. But is there anything that could close that gap further over time in terms of pricing action, competitiveness because you can offer, you know, customers now are not just buying, you know, sort of 3 products perhaps, but they are buying 5 or 6, and you can bundle things and price better that way. So I guess over the next couple years, is it that ice and beverage is just structurally lower margins or are there pricing opportunities, bundling opportunities, obviously, cost efficiencies you talked about that over the next 3 years, that you can kind of close that gap even further or above and beyond, you know, efficiencies from higher production.

Yes. There is nothing structurally within that platform that would cause those margins to be lower than the cooking side. There is a lot of innovation and technology there. I think it is I would really kind of chalk it up to where are we at in the journey. Right? Like, we have been at it with cooking and warming for a long time, which, by the way, there are opportunities there as well as we kind of execute on the operating initiatives and some of the things to leverage the scale of the platform. You know, it is still a relatively early stage platform, and we are mid twenties. Right? So I think, you know, and we are making significant investment in innovation R&D. So I mean, I think that is 1 of the things that excites us is if you look at some of the more mature companies within that platform, they are actually you know, I will say at or above our target margins right now. So, I mean, I think it is really just where we are at in the journey as we kind of move forward to scaling some of the new products that we are launching Some of the operating initiatives underway including some of, I will say, the integration of some of the new businesses and then execution of kind of the operating initiatives. I mean, you know, we have got a high degree of confidence that those businesses kind of get to the target margin that we have, which are, you know, I will say very similar to what we think we are at and can achieve in cooking and warming. Okay. Great.

And then another question on QSR visibility. You know, QSR stuff's improved. Is there any more visibility and line of sight through the year end this year than you have had in the last couple years in terms of, you know, their store rollout and openings or as we kind of get to this back half of the year that there is still risk like there is been for the last couple years and beyond that you could see potential pushouts towards the end of the year, or do you think that is stabilized better than in the last few years where you were comping negative In terms of new store openings, we have we have had very good visibility over the last several years.

I think it is greatly improved as we went through some of the supply chain challenges from, you know, 2022 and 2023. That said, I think the new store opening pipeline, the rest of this year is fairly stable. I mean, there is gonna be push outs, but there have been push outs really over the last year or 2. So I think it is pretty consistent. I think where we have, more visibility is in just some of the new projects that we have been talking about that are starting to get freed up more and more, and they are starting to be green lighted more and more. And so I think that is where from a pipeline perspective, we are more excited about where we are today versus, say, where we were a year ago. Is in that new product pipeline. Okay. Great. Super helpful. Thanks.

The next question is a follow-up from Timothy Thein with Raymond James. Please go ahead.

Thank you. Sorry to come back here. Maybe 2 for Steven that I will package together. The first is the mix within the product mix. And I guess this is probably more of a general market question. But you know, just as operator budgets continue to get stretched, I am just curious if you have seen that show up in terms of you know, features and content within items or, you know, opting for lower price units, things like that. I am just curious if the you talked about mix from the standpoint of hot versus cold, but I am curious if you have seen it more pronounced in terms of features and specs. And then the second part is on the organic growth, call it, you know, percent in the first half to in the back half, I you know, the comps get a little tougher, but is it is it the rollout that may be, you know, getting pushed? Is there because you have got, presumably, maybe a little bit more pricing that kicks in. So I am just curious if or none of the above just in terms of I guess, how we go from the first half organic run rate to what we are modeling for the second. Thank you.

Yeah. Thanks, Timothy. I will try to take a pass at both. You know, it is really interesting in terms of your first question and especially within the QSR space. We know that, you know, the-- the end-user operator, the franchisee is certainly watching costs more than ever before. There is a very clear delineation, I think, in chains that are winning in the market versus the ones that are not. And it is tied to, are they trying to buy the same products they always have and just trying to buy them at a cheaper price? Like, that is 1 approach. And that approach is currently tied to, I think, chains that are not doing as well versus the chains that are investing in the new products, the new equipment, that is giving them operational improvements, that is fueling throughput consistency. Giving them new additional dayparts. So in spite of what how you teed up the question of it is a challenging environment from a cost perspective. I actually think it is leading QSRs to actually invest in better technologies with more features and benefits because it gives them a greater ROI which has become probably the most important metric that they are looking at for their franchisees. In terms of the second question, the rest of this year, Timothy, it really is a function of you know, we grew so much the back half of last year within the dealer segment in the US. Again, it was double-digit growth in both the third and fourth quarter. That growth is continuing to be positive. it is just not growing at the same pace it was, you know, a year ago. So that really is the big change in the back half of the year. So dealers remain positive, just not at the same level. But, really, the growth is coming from again, the continued growth in chain customers, predominantly the QSR. So it is really not a function of anybody slowing down. it is more a function of you know, how it compares to the back half of last year. Got it. Thank you, Steven.

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

Thank you, everybody, for joining today's call. I also want to thank all of the Middleby team members around the world who contributed to what has been a major milestone and significant achievement with the execution of the separation of our businesses into the 3 leading platforms, That was a heavy effort from many across the organization and through the entire transformation, the team stayed focused on moving our core commercial business ahead. With many exciting initiatives that have us positioned stronger than ever. I am thankful for all of those efforts and very proud of the team. So with that, thank you all for joining today's call, and we look forward to speaking with you next quarter.

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