Special Note Regarding Forward-Looking Statements



This report contains "forward-looking statements" subject to the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors, which could
cause the company's actual results, performance or outcomes to differ materially
from those expressed or implied in the forward-looking statements. The following
are some of the important factors that could cause the company's actual results,
performance or outcomes to differ materially from those discussed in the
forward-looking statements:

•changing market conditions;

•volatility in earnings resulting from goodwill impairment losses, which may occur irregularly and in varying amounts;

•variability in financing costs;

•quarterly variations in operating results;

•dependence on key customers;



•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;

•the company's ability to protect its trademarks, copyrights and other intellectual property;

•the impact of competitive products and pricing;

•the impact of announced management and organizational changes;

•the state of the residential construction, housing and home improvement markets;

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

•intense competition in the company's business segments including the impact of both new and established global competitors;

•unfavorable tax law changes and tax authority rulings;

•cybersecurity attacks and other breaches in security;

•the continued ability to realize profitable growth through the sourcing and completion of strategic acquisitions;

•the timely development and market acceptance of the company's products; and

•the availability and cost of raw materials.



The company cautions readers to carefully consider the statements set forth in
the section entitled "Item 1A. Risk Factors" of this filing and discussion of
risks included in the company's SEC filings.

                                       27
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COVID-19 Update



The global coronavirus ("COVID-19") pandemic and associated counteracting
measures implemented by governments and businesses around the world, as well as
subsequent accelerated recovery in global business activity, have increased
uncertainty in the global business environment and led to supply chain
disruptions and shortages in global markets for commodities, logistics and
labor, as well as input cost inflation. More recently, the war in Ukraine has
further contributed to some of the disruptive factors. Activity in most of our
end markets we serve improved through 2021 and into 2022, although demand in
certain businesses, most notably in our residential segment, have faced recent
demand headwinds. While facing headwinds, including a highly inflationary
environment, we remain committed to executing productivity and profitability
initiatives to address margin challenges, combined with diligent pricing actions
where possible. The limited availability of certain product components has
resulted in lengthened lead times and higher input costs, including labor,
energy, freight, logistics, and in some cases, has impacted our ability to meet
customer demand. The company expects input costs to remain elevated for some
period of time, which we are working to mitigate. The availability of resources
and inflationary costs have resulted in heightened inventory levels, impacts
margins and placed constraints on our operating cash flows. Heightened backlog
levels have also resulted. Our teams are actively evaluating options for
alternative suppliers, dual sourcing and collaborating across the organization,
where appropriate, without materially presenting new risks or increasing current
risks around quality and reliability. We expect our cash flows to continue to
improve as we manage inventory levels to fulfill the backlog and provide for
future demand. Our capital resources have been sufficient to address these
challenges and are expected to continue to be.
We remain focused on delivering strong financial results and executing on our
long-term strategy and profitability objectives. The lingering effects of the
COVID-19 pandemic, global response measures and corresponding impacts on various
markets remain fluid and uncertain and may lead to sudden changes in trajectory
and outlook. The company plans to continue to proactively respond to the
situation and may take further actions that alter our operations as may be
required by governmental authorities, or that we determine are in the best
interests of our employees and operations.

Termination of Welbilt Merger



As previously disclosed, on April 20, 2021, Middleby entered into a Merger
Agreement with Welbilt, Inc. Following Welbilt's receipt of an alternative
acquisition proposal, on July 13, 2021, Middleby announced that, under the terms
of the Merger Agreement, it would not exercise its right to propose any
modifications to the terms of the Merger Agreement and would allow the match
period to expire. Accordingly, on July 14, 2021, Welbilt delivered to Middleby a
written notice terminating the Merger Agreement and, concurrently with
Middleby's receipt of the termination fee of $110.0 million in cash from
Welbilt, the Merger Agreement was terminated on July 14, 2021.

The termination fee received is reflected in the Condensed Consolidated
Statements of Comprehensive Income as the "merger termination fee" and $19.7
million of deal costs associated with the transaction are reflected in selling,
general and administrative expenses in the Condensed Consolidated Statements of
Comprehensive Income.

                               NET SALES SUMMARY
                             (dollars in thousands)

                                             Fiscal Year Ended(1)
                                    2022                          2021                          2020
                             Sales         Percent         Sales         Percent         Sales         Percent
Business Segments:

Commercial Foodservice   $ 2,410,266        59.8  %    $ 2,032,761        62.5  %    $ 1,510,279        60.1  %

Food Processing              574,465        14.2           480,746        14.8           437,272        17.4

Residential Kitchen        1,048,122        26.0           737,285        22.7           565,706        22.5

Total                    $ 4,032,853       100.0  %    $ 3,250,792       100.0  %    $ 2,513,257       100.0  %

(1)The company's fiscal year ends on the Saturday nearest to December 31.


                                       28
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Results of Operations

The following table sets forth certain items in the consolidated statements of earnings as a percentage of net sales for the periods presented:




                                                                                    Fiscal Year Ended(1)
                                                                    2022                    2021                    2020
Net sales                                                              100.0  %                100.0  %                100.0  %
Cost of sales                                                           64.1                    63.2                    64.9
Gross profit                                                            35.9                    36.8                    35.1
Selling, general and administrative expenses                            19.8                    20.5                    21.2

Restructuring                                                            0.2                     0.3                     0.5
Merger termination fee                                                     -                    (3.4)                      -
Gain on sale of plant                                                      -                       -                    (0.1)
Impairments                                                                -                       -                     0.6
Income from operations                                                  15.9                    19.4                    12.9
Interest expense and deferred financing amortization, net                2.2                     1.8                     3.1

Net periodic pension benefit (other than service cost & curtailment)

                                                            (1.0)                   (1.4)                   (1.6)
Curtailment loss                                                           -                       -                     0.6
Other expense (income), net                                              0.7                       -                     0.1
Earnings before income taxes                                            14.0                    19.0                    10.7
Provision for income taxes                                               3.2                     4.0                     2.4
Net earnings                                                            10.8  %                 15.0  %                  8.3  %

(1)The company's fiscal year ends on the Saturday nearest to December 31.


                                       29
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Fiscal Year Ended December 31, 2022 as Compared to January 1, 2022

NET SALES. Net sales in fiscal 2022 increased by $782.1 million, or 24.1%, to
$4,032.9 million as compared to $3,250.8 million in fiscal 2021. Net sales
increased by $433.6 million, or 13.3%, from the fiscal 2021 acquisitions of
Novy, Imperial, Newton CFV, Char-Griller, Kamado Joe and Masterbuilt and the
fiscal 2022 acquisitions of Kloppenberg, Proxaut, Icetro, CP Packaging, Colussi,
Escher, and Marco. Excluding acquisitions, net sales increased $348.5 million,
or 10.7%, from the prior year. The impact of foreign exchange rates on foreign
sales translated into U.S. Dollars for fiscal 2022 decreased net sales by
approximately $85.0 million. Excluding the impact of foreign exchange and
acquisitions, sales increased 13.3% for the year, including a net sales increase
of 16.4% at the Commercial Foodservice Equipment Group, a net sales increase of
14.3% at the Food Processing Equipment Group and a net sales increase of 4.3% at
the Residential Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $377.5
million, or 18.6%, to $2,410.3 million in fiscal 2022 as compared to $2,032.8
million in fiscal 2021. Net sales from the acquisitions of Imperial, Newton CFV,
Kloppenberg, Icetro, and Marco, which were acquired on September 24, 2021,
November 16, 2021, April 25, 2022, June 30, 2022, and December 20, 2022,
respectively, accounted for an increase of $84.6 million during fiscal 2022.
Excluding the impact of acquisitions, net sales of the Commercial Foodservice
Equipment Group increased $292.9 million, or 14.4%, as compared to the prior
year. Excluding the impact of foreign exchange and acquisitions, net sales
increased $333.2 million, or 16.4% at the Commercial Foodservice Equipment
Group. Domestically, the company realized a sales increase of $331.2 million, or
23.1%, to $1,766.3 million, as compared to $1,435.1 million in the prior year.
This includes an increase of $70.7 million from recent acquisitions. Excluding
acquisitions, the net increase in domestic sales was $260.5 million, or 18.2%.
The increase in domestic sales is related to improvements in market conditions,
consumer demand, and pricing increases. International sales increased $46.3
million, or 7.7%, to $644.0 million, as compared to $597.7 million in the prior
year. This includes the increase of $13.9 million from recent acquisitions and a
decrease of $40.3 million related to the unfavorable impact of exchange rates.
Excluding acquisitions and foreign exchange, the net sales increase in
international sales was $72.7 million, or 12.2%. The increase in international
sales is related to improvements in market conditions, primarily in the European
and Latin American markets.

•Net sales of the Food Processing Equipment Group increased by $93.8 million, or
19.5%, to $574.5 million in fiscal 2022, as compared to $480.7 million in fiscal
2021. Net sales from the acquisitions of Proxaut, CP Packaging, Colussi, and
Escher, which were acquired on June 29, 2022, July 12, 2022, July 27, 2022, and
November 10, 2022, respectively, accounted for an increase of $41.3 million
during fiscal 2022. Excluding the impact of acquisitions, net sales of the Food
processing Equipment Group increased $52.5 million, or 10.9%, as compared to the
prior year. Excluding the impact of foreign exchange and acquisitions, net sales
increased $68.7 million, or 14.3% at the Food Processing Equipment Group.
Domestically, the company realized a sales increase of $63.6 million, or 18.3%,
to $410.9 million, as compared to $347.3 million in the prior year. This
includes an increase of $11.3 million from recent acquisitions. Excluding
acquisitions, the net increase in domestic sales was $52.3 million, or 15.1%.
The increase in domestic sales reflects growth primarily driven by protein
products. International sales increased $30.2 million, or 22.6%, to $163.6
million, as compared to $133.4 million in the prior year. This includes the
increase of $30.0 million from recent acquisitions and a decrease of $16.2
million related to the unfavorable impact of exchange rates. Excluding
acquisitions and foreign exchange, the net sales increase in international sales
was $16.4 million, or 12.3%. The increase in international sales reflects growth
primarily driven by protein products.

•Net sales of the Residential Kitchen Equipment Group increased by $310.8
million, or 42.2%, to $1,048.1 million in fiscal 2022, as compared to $737.3
million in fiscal 2021. Net sales from the acquisitions of Novy, Char-Griller,
and Kamado Joe and Masterbuilt, which were acquired on July 12, 2021, December
27, 2021, and December 27, 2021, respectively, accounted for an increase of
$307.7 million during fiscal 2022. Excluding the impact of acquisitions, net
sales of the Residential Kitchen Equipment Group increased $3.1 million, or
0.4%, as compared to the prior year. Excluding the impact of foreign exchange
and acquisitions, net sales increased $31.6 million, or 4.3% at the Residential
Kitchen Equipment Group. Domestically, the company realized a sales increase of
$247.5 million, or 54.5%, to $701.9 million, as compared to $454.4 million in
the prior year. This includes an increase of $204.2 million from recent
acquisitions. Excluding acquisitions, the net increase in domestic sales was
$43.3 million, or 9.5%. The increase in domestic sales reflects the strong
demand for our premium appliance brands. International sales increased $63.3
million, or 22.4% to $346.2 million, as compared to $282.9 million in the prior
year. This includes an increase of $103.5 million from recent acquisitions and a
decrease of $28.5 million related to the unfavorable impact of exchange rates.
Excluding acquisitions and foreign exchange, the net sales decrease in
international sales was $11.7 million, or 4.1%. The decrease in international
sales was primarily driven by challenging market conditions in the European
market.
                                       30
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GROSS PROFIT. Gross profit increased by $251.7 million to $1,446.6 million in
fiscal 2022 from $1,194.9 million in fiscal 2021, primarily reflecting higher
sales volumes related to improvements in market conditions and consumer demand,
partially offset by the unfavorable impact of foreign exchange rates of $33.1
million. The gross profit margin rate decreased to 35.9% in 2022 as compared to
36.8% in 2021. The gross margin rate in fiscal 2022 excluding acquisitions and
impact of foreign exchange was 37.5%. Gross profit margins have been negatively
impacted by acquisitions, including $17.4 million of acquisition related
inventory step-up charges, along with rising costs of many raw materials and
inputs, higher labor rates, and logistics costs.

•Gross profit at the Commercial Foodservice Equipment Group increased by $161.7
million, or 21.5%, to $914.6 million in fiscal 2022 as compared to $752.9
million in fiscal 2021. Gross profit from acquisitions increased gross profit by
$29.8 million. Excluding acquisitions, gross profit increased by $131.9 million
related to higher sales volumes. The impact of foreign exchange rates decreased
gross profit by approximately $15.2 million. The gross profit margin rate
increased to 37.9% in fiscal 2022 as compared to 37.0% in the prior year. The
gross profit margin rate in fiscal 2022 excluding acquisitions and the impact of
foreign exchange was 38.0%.

•Gross profit at the Food Processing Equipment Group increased by $33.2 million,
or 19.1%, to $207.4 million in fiscal 2022 as compared to $174.2 million in
fiscal 2021. Gross profit from acquisitions increased gross profit by $12.2
million. Excluding acquisitions, gross profit increased by $21.0 million related
to higher sales volumes. The impact of foreign exchange rates decreased gross
profit by approximately $7.3 million. The gross profit margin rate decreased to
36.1% in fiscal 2022 as compared to 36.2% in the prior year. The gross profit
margin rate in fiscal 2022 excluding the impact of foreign exchange was 36.9%.

•Gross profit at the Residential Kitchen Equipment Group increased by $57.2
million, or 21.3%, to $325.8 million in fiscal 2022 as compared to $268.6
million in fiscal 2021. Gross profit from acquisitions increased gross profit by
$54.8 million. Excluding acquisitions, gross profit increased by $2.4 million.
The impact of foreign exchange rates decreased gross profit by approximately
$10.6 million. The gross margin rate decreased to 31.1% in fiscal 2022 as
compared to 36.4% in the prior year. Gross profit margins have been negatively
impacted by acquisitions, including $15.1 million of acquisition related
inventory step-up charges. The gross profit margin rate in fiscal 2022 excluding
acquisitions and the impact of foreign exchange was 36.6%.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Combined selling, general, and
administrative expenses increased by $129.2 million to $797.2 million in fiscal
2022 from $668.0 million in 2021. As a percentage of net sales, selling, general
and administrative expenses amounted to 19.8% in fiscal 2022 and 20.5% in fiscal
2021.

Selling, general and administrative expenses reflect increased costs of
$88.1 million associated with acquisitions, including $22.7 million of non-cash
intangible amortization expense. Selling, general and administrative expenses
increased from compensation, selling and commissions expenses, partially offset
by lower professional fees and intangible amortization expense. Foreign exchange
rates had a favorable impact of $15.1 million.

RESTRUCTURING EXPENSES. Restructuring expenses increased $2.0 million to $9.7
million from $7.7 million in the prior year period. In fiscal 2022,
restructuring expenses related primarily to headcount reductions and facility
consolidations within the Commercial Foodservice Equipment Group and Residential
Kitchen Equipment Group and non-cash restructuring valuation allowances on
balances associated with activities in Russia. During fiscal 2021, restructuring
charges related primarily to headcount reductions and facility consolidations
within the Commercial Foodservice Equipment Group.

INCOME FROM OPERATIONS. Income from operations increased $9.6 million to $639.6
million in fiscal 2022 from $630.0 million in fiscal 2021. Operating income as a
percentage of net sales amounted to 15.9% in 2022 as compared to 19.4% in 2021.
During fiscal 2021, the company received approximately $67.7 million in a
termination fee, net of deal costs and taxes. The increase in operating income
resulted from increased sales volumes driven by acquisitions and improved market
conditions.

Income from operations in 2022 included $189.3 million of non-cash expenses,
including $44.6 million of depreciation expense, $86.3 million of intangible
amortization related to acquisitions and $58.4 million of stock based
compensation. This compares to $160.8 million of non-cash expenses in the prior
year, including $42.7 million of depreciation expense, $75.8 million of
intangible amortization related to acquisitions and $42.3 million of stock based
compensation costs.


                                       31

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NON-OPERATING EXPENSES. Non-operating expenses increased $64.7 million to $75.2
million of expense in fiscal 2022 from $10.5 million of expense in fiscal 2021.
Net interest expense and deferred financing increased $31.8 million to $89.0
million in fiscal 2022 from $57.2 million in fiscal 2021 reflecting the increase
in interest rates and borrowing levels under our current credit facility. Net
periodic pension benefit (other than service costs and curtailment) decreased
$2.4 million to $42.7 million in fiscal 2022 from $45.1 million in fiscal 2021.
Other expense was $28.9 million during fiscal 2022 as compared to other income
of $1.6 million during fiscal 2021, consisting mainly of foreign exchange losses
and gains.

INCOME TAXES. A tax provision of $127.8 million, at an effective rate of 22.7%,
was recorded for fiscal 2022 as compared to $131.0 million at an effective rate
of 21.1%, in fiscal 2021. The fiscal 2022 tax provision includes a deferred tax
benefit of approximately $13 million associated with legal entity restructuring
the company undertook to integrate and simplify the company's business
operations. The fiscal 2022 tax provision also reflects higher non-deductible
stock compensation expense, where the prior year included favorable impacts from
tax rate changes, tax refunds and adjustments for the finalization of 2020 tax
returns. The effective rates in 2022 and 2021 are higher than the federal tax
rate of 21% primarily due to state taxes and foreign tax rate differentials.

                                       32
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Fiscal Year Ended January 1, 2022 as Compared to January 2, 2021

NET SALES. Net sales in fiscal 2021 increased by $737.5 million, or 29.3%, to
$3,250.8 million as compared to $2,513.3 million in fiscal 2020. Net sales
increased by $124.8 million, or 5.0%, from the fiscal 2020 acquisitions of
Deutsche, Wild Goose, United Foodservice Equipment Zhuhai and the fiscal 2021
acquisitions of Novy, Newton CFV, Imperial, Char-Griller, and Kamado Joe and
Masterbuilt. Excluding acquisitions and a disposition, net sales increased
$631.8 million, or 25.3%, from the prior year. The impact of foreign exchange
rates on foreign sales translated into U.S. Dollars for fiscal 2021 increased
net sales by approximately $39.5 million. Excluding the impact of foreign
exchange, acquisitions and the disposition, sales increased 23.7% for the year,
including a net sales increase of 28.2% at the Commercial Foodservice Equipment
Group, a net sales increase of 9.1% at the Food Processing Equipment Group and a
net sales increase of 23.2% at the Residential Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $522.5
million, or 34.6%, to $2,032.8 million in fiscal 2021 as compared to $1,510.3
million in fiscal 2020. Net sales from the acquisitions of Deutsche, Wild Goose,
United Foodservice Equipment Zhuhai, Newton CFV, and Imperial which were
acquired on March 2, 2020, December 7, 2020, December 18, 2020, November 16,
2021 and September 24, 2021, respectively, accounted for an increase of $77.4
million during fiscal 2021. Excluding the impact of acquisitions, net sales of
the Commercial Foodservice Equipment Group increased $445.1 million, or 29.5%,
as compared to the prior year. Excluding the impact of foreign exchange and
acquisitions, net sales increased $426.1 million, or 28.2% at the Commercial
Foodservice Equipment Group. Domestically, the company realized a sales increase
of $367.2 million, or 34.4%, to $1,435.1 million, as compared to $1,067.9
million in the prior year. This includes an increase of $61.3 million from
recent acquisitions. Excluding acquisitions, the net increase in domestic sales
was $305.9 million, or 28.6%. The increase in domestic sales is related to
improvements in market conditions and consumer demand. International sales
increased $155.3 million, or 35.1%, to $597.7 million, as compared to $442.4
million in the prior year. This includes the increase of $16.1 million from
recent acquisitions and an increase of $19.0 million related to the favorable
impact of exchange rates. Excluding acquisitions and foreign exchange, the net
sales increase in international sales was $120.2 million, or 27.2%. The increase
in international sales is related to improvements in market conditions,
primarily in the European and Asian markets.

•Net sales of the Food Processing Equipment Group increased by $43.4 million, or
9.9%, to $480.7 million in fiscal 2021, as compared to $437.3 million in fiscal
2020. Excluding the impact of foreign exchange, net sales increased $39.6
million, or 9.1% at the Food Processing Equipment Group. Domestically, the
company realized a sales increase of $36.2 million, or 11.6%, to $347.3 million,
as compared to $311.1 million in the prior year. The increase in domestic sales
reflects growth driven by both protein and bakery products. International sales
increased $7.2 million, or 5.7%, to $133.4 million, as compared to $126.2
million in the prior year. This includes an increase of $3.8 million related to
the favorable impact of exchange rates. Excluding foreign exchange, the net
sales increase in international sales was $3.4 million, or 2.7%. The increase in
international revenues is primarily driven by protein projects.

•Net sales of the Residential Kitchen Equipment Group increased by $171.6
million, or 30.3%, to $737.3 million in fiscal 2021, as compared to $565.7
million in fiscal 2020. Net sales from the acquisitions of Novy, Char-Griller,
and Kamado Joe and Masterbuilt, which were acquired on July 12, 2021, December
27, 2021, and December 27, 2021, respectively, accounted for an increase of
$47.4 million during fiscal 2021. Excluding the impact of acquisitions and the
disposition, net sales of the Residential Kitchen Equipment Group increased
$143.3 million, or 26.2%, as compared to the prior year. Excluding the impact of
foreign exchange, acquisitions, and the disposition, net sales increased $126.6
million, or 23.2% at the Residential Kitchen Equipment Group. Domestically, the
company realized a sales increase of $80.5 million, or 21.5%, to $454.4 million,
as compared to $373.9 million in the prior year. This includes an increase of
$3.5 million from recent acquisitions. Excluding acquisitions, the net increase
in domestic sales was $77.0 million, or 20.6%. International sales increased
$91.1 million, or 47.5% to $282.9 million, as compared to $191.8 million in the
prior year. This includes an increase of $43.9 million from recent acquisitions
and an increase of $16.7 million related to the favorable impact of exchange
rates. Excluding acquisitions, the disposition, and foreign exchange, the net
sales increase in international sales was $49.6 million, or 28.7%. The increase
in domestic and international sales reflects the strong demand for our premium
appliance brands and strength in the European market.
                                       33
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GROSS PROFIT. Gross profit increased by $312.9 million to $1,194.9 million in
fiscal 2021 from $882.0 million in fiscal 2020, primarily reflecting higher
sales volumes related to improvements in market conditions and consumer demand
and the favorable impact of foreign exchange rates of $14.0 million. The gross
profit margin rate increased to 36.8% in 2021 as compared to 35.1% in 2020. The
gross margin rate in fiscal 2021 excluding acquisitions and impact of foreign
exchange was 37.0%.

•Gross profit at the Commercial Foodservice Equipment Group increased by $230.7
million, or 44.2%, to $752.9 million in fiscal 2021 as compared to $522.2
million in fiscal 2020. Gross profit from acquisitions increased gross profit by
$27.1 million. Excluding acquisitions, gross profit increased by approximately
$203.6 million related to higher sales volumes. The impact of foreign exchange
rates increased gross profit by approximately $6.7 million. The gross profit
margin rate increased to 37.0% in fiscal 2021 as compared to 34.6% in the prior
year. The gross profit margin rate in fiscal 2021 excluding acquisitions and the
impact of foreign exchange was 37.1%.

•Gross profit at the Food Processing Equipment Group increased by $17.1 million,
or 10.9%, to $174.2 million in fiscal 2021 as compared to $157.1 million in
fiscal 2020. The impact of foreign exchange rates increased gross profit by
approximately $2.0 million. The gross profit margin rate increased to 36.2% in
fiscal 2021 as compared to 35.9% in the prior year. The gross profit margin rate
in fiscal 2021 excluding the impact of foreign exchange was 36.1%.

•Gross profit at the Residential Kitchen Equipment Group increased by $64.3
million, or 31.5%, to $268.6 million in fiscal 2021 as compared to $204.3
million in fiscal 2020. Gross profit from acquisitions increased gross profit by
$11.0 million. Excluding acquisitions, gross profit increased by approximately
$53.3 million related to higher sales volumes. The impact of foreign exchange
rates increased gross profit by approximately $5.3 million. The gross margin
rate increased to 36.4% in fiscal 2021 as compared to 36.1% in the prior year.
The gross profit margin rate in fiscal 2021 excluding acquisitions and the
impact of foreign exchange was 37.5%.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Combined selling, general, and
administrative expenses increased by $136.1 million to $668.0 million in fiscal
2021 from $531.9 million in 2020. As a percentage of net sales, selling, general
and administrative expenses amounted to 20.5% in fiscal 2021 and 21.2% in fiscal
2020.

Selling, general and administrative expenses reflect increased costs of
$33.0 million associated with acquisitions, including $11.8 million of non-cash
intangible amortization expense. Selling, general and administrative expenses
increased approximately $90.0 million related to compensation costs,
professional fees, and commission expense. Increases in professional fees were
driven by the costs associated with our proposed and subsequently terminated
acquisition of Welbilt, as well as overall increased deal activity. Foreign
exchange rates had a favorable impact of $6.7 million.

RESTRUCTURING EXPENSES. Restructuring expenses decreased $4.7 million to $7.7
million from $12.4 million in the prior year period. In fiscal 2021,
restructuring expenses related primarily to headcount reductions and facility
consolidations within the Commercial Foodservice Equipment Group. During fiscal
2020, restructuring charges related primarily to headcount reductions and cost
reduction initiatives related to facility consolidations at the Commercial
Foodservice Equipment Group and Residential Kitchen Equipment Group.

IMPAIRMENTS. In fiscal 2020, the company recognized impairment of $11.6 million
associated with several trade names in conjunction with the diminution of value
as we assessed current market conditions and future business plans. See Note 3
(f) to the Consolidated Financial Statements for further information on the
annual impairment testing. In addition, the company recorded an impairment
charge of approximately $2.9 million to reflect the fair market value of assets
held for sale for a non-core business within the Residential Kitchen Equipment
Group. See Note 13, Restructuring and Acquisition Integration Initiatives, in
the Notes to the Consolidated Financial Statements for further information on
restructuring initiatives. In fiscal 2021, there were no impairments recognized
in the Consolidated Financial Statements.
                                       34
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INCOME FROM OPERATIONS. Income from operations increased $305.6 million to
$630.0 million in fiscal 2021 from $324.4 million in fiscal 2020. Operating
income as a percentage of net sales amounted to 19.4% in 2021 as compared to
12.9% in 2020. The increase in operating income resulted from improved market
conditions and increased sales volumes. In addition, during fiscal 2021, the
company received approximately $67.7 million in a termination fee, net of deal
costs and taxes. Operating income in fiscal 2020 included impairment charges
related to intangible assets, fixed assets, and assets held for sale.

Income from operations in 2021 included $160.8 million of non-cash expenses,
including $42.7 million of depreciation expense, $75.8 million of intangible
amortization related to acquisitions and $42.3 million of stock based
compensation. This compares to $127.7 million of non-cash expenses in the prior
year, including $39.1 million of depreciation expense, $69.0 million of
intangible amortization related to acquisitions and $19.6 million of stock based
compensation costs.

NON-OPERATING EXPENSES. Non-operating expenses decreased $45.9 million to $10.5
million of expense in fiscal 2021 from $56.4 million of expense in fiscal 2020.
Net interest expense and deferred financing decreased $21.5 million to $57.2
million in fiscal 2021 from $78.6 million in fiscal 2020 reflecting a reduction
in borrowing levels and lower borrowing costs on our current debt structure. Net
periodic pension benefit (other than service costs and curtailment) increased
$5.1 million to $45.1 million in fiscal 2021 from $40.0 million in fiscal 2020,
related to the decrease in discount rate used to calculate the interest cost.
During fiscal 2020 a curtailment cost of approximately $14.7 million was
recognized as a result of closing the AGA Group Pension Scheme to future pension
accruals.

INCOME TAXES. A tax provision of $131.0 million, at an effective rate of 21.1%,
was recorded for fiscal 2021 as compared to $60.8 million at an effective rate
of 22.7%, in fiscal 2020. In comparison to the prior year, the tax provision
reflects favorable tax adjustments for deferred tax rate changes, tax refunds
and adjustments for the finalization of 2020 tax returns. The effective rates in
2021 and 2020 are higher than the federal tax rate of 21% primarily due to state
taxes and foreign tax rate differentials.
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Financial Condition and Liquidity



Total cash and cash equivalents decreased by $18.4 million to $162.0 million at
December 31, 2022 from $180.4 million at January 1, 2022. Total debt increased
to $2.7 billion at December 31, 2022 from $2.4 billion at January 1, 2022.

OPERATING ACTIVITIES. Net cash provided by operating activities after changes in
assets and liabilities amounted to $332.6 million as compared to $423.4 million
in the prior year.

During fiscal 2022, working capital changes meaningfully impacted operating cash
flows primarily driven by increased inventory of $196.3 million related to the
seasonality of acquired businesses, efforts to mitigate supply chain risks and
inflationary impacts.

In connection with the company's acquisition activities, the company added assets and liabilities from the opening balance sheets of the acquired businesses in its consolidated balance sheets and accordingly these amounts are not reflected in the net changes in working capital.

INVESTING ACTIVITIES. During 2022, net cash used for investing activities amounted to $348.3 million. Cash used to fund acquisitions and investments amounted to $278.8 million. Additionally, $67.3 million was expended, primarily for upgrades of production equipment and manufacturing facilities.



FINANCING ACTIVITIES. Net cash flows provided by financing activities amounted
to $7.6 million in 2022. The company's borrowing activities during 2022 included
$314.8 million of net proceeds under its Credit Facility. Additionally, the
company repurchased $264.8 million of Middleby common shares during 2022. This
was comprised of $15.8 million to repurchase 90,243 shares of Middleby common
stock that were surrendered to the company for withholding taxes related to
restricted stock vestings and $249.0 million used to repurchase 1,553,961 shares
of its common stock under a repurchase program.

At December 31, 2022, 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.

Material Cash Requirements

The company's material cash requirements from contractual obligations primarily
consist of long-term debt obligations, operating lease obligations, tax
obligations and contingent purchase price payments to the sellers that were
deferred in conjunction with various acquisitions. See Notes 3, 5 and 7 to the
Consolidated Financial Statements for further information.

Related Party Transactions

From January 2, 2022, through the date hereof, there were no transactions between the company, its directors and executive officers that are required to be disclosed pursuant to Item 404 of Regulation S-K, promulgated under the Securities and Exchange Act of 1934, as amended.


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Critical Accounting Policies and Estimates




Management's discussion and analysis of financial condition and results of
operations are based upon the company's 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 our consolidated financial statements.

Revenue Recognition
Revenue is recognized when the control of the promised goods or services are
transferred to our customers, in an amount that reflects the consideration that
we expect to receive in exchange for those goods or services.

A performance obligation is a promise in a contract to transfer a distinct good
or service to the customer and represents the unit of account. A contract's
transaction price is allocated to each distinct performance obligation and
recognized as revenue when, or as, the performance obligation is satisfied. The
company's contracts can have multiple performance obligations or just a single
performance obligation. For contracts with multiple performance obligations, the
contract's transaction price is allocated to each performance obligation using
the company's best estimate of the standalone selling price of each distinct
good or service in the contract.

Within the Commercial Foodservice Equipment and Residential Foodservice
Equipment Groups, the estimated standalone selling price of equipment is based
on observable prices. Within the Food Processing Equipment Group, the company
estimates the standalone selling price based on expected cost to manufacture the
good or complete the service plus an appropriate profit margin.

Control may pass to the customer over time or at a point in time. In general,
the Commercial Foodservice Equipment and Residential Foodservice Equipment
Groups recognize revenue at the point in time control transfers to their
customers based on contractual shipping terms. Revenue from equipment sold under
our long-term contracts within the Food Processing Equipment group is recognized
over time as the equipment is manufactured and assembled. Installation services
provided in connection with the delivery of the equipment are also generally
recognized as those services are rendered. Over time transfer of control is
measured using an appropriate input measure (e.g., costs incurred or direct
labor hours incurred in relation to total estimate). These measures include
forecasts based on the best information available and therefore reflect the
company's judgment to faithfully depict the transfer of the goods.

Inventories


Inventories are stated at the lower of cost or net realizable value using the
first-in, first-out method for the majority of the company's inventories. The
company evaluates the need to record valuation adjustments for inventory on a
regular basis. The company's policy is to evaluate all inventories including raw
material, work-in-process, finished goods, and spare parts. Inventory in excess
of estimated usage requirements is written down to its estimated net realizable
value. Inherent in the estimates of net realizable value are estimates related
to our future manufacturing schedules, customer demand, possible alternative
uses, and ultimate realization of potentially excess inventory.

Goodwill and Indefinite-Life Intangibles
The company's business acquisitions result in the recognition of goodwill and
other intangible assets, which are a significant portion of the company's total
assets. Goodwill represents the excess of acquisition costs over the fair value
of the net tangible assets and identifiable intangible assets acquired in a
business combination. Identifiable intangible assets are recognized separately
from goodwill and include trademarks and trade names, technology, customer
relationships and other specifically identifiable assets. Trademarks and trade
names are deemed to be indefinite-lived. Goodwill and indefinite-lived
intangible assets are not amortized but are subject to impairment testing.

On an annual basis on the first day of the fourth quarter, or more frequently if
triggering events occur, the company performs an impairment assessment for
goodwill and indefinite-lived intangible assets. The company considers
qualitative factors to assess if it is more likely than not that the fair value
of goodwill and indefinite-lived intangible assets is below the carrying value.

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In conducting a qualitative assessment, the company analyzes a variety of events
or factors that may influence the fair value of the reporting unit including,
but not limited to: the results of prior quantitative assessments performed;
changes in the carrying amount of the reporting unit; actual and projected
revenue and operating margin; relevant market data for both the company and its
peer companies; industry outlooks; macroeconomic conditions; liquidity; changes
in key personnel; and the company's competitive position. Significant judgment
is used to evaluate the totality of these events and factors to make the
determination of whether it is more likely than not that the fair value of the
reporting unit or indefinite-life intangible is less than its carrying value.

Goodwill Valuations
The reporting units at which we test goodwill for impairment are our operating
segments. These consist of the Commercial Foodservice Equipment Group, the Food
Processing Equipment Group and the Residential Kitchen Equipment Group. If the
fair value is less than its carrying value, an impairment loss, if any, is
recorded for the difference between the implied fair value and the carrying
value of goodwill.

In performing a quantitative assessment, if required, the company estimates each
reporting unit's fair value under an income approach using a discounted cash
flow model. The income approach uses each reporting unit's projection of
estimated operating results and cash flows that are discounted using a market
participant discount rate based on a weighted-average cost of capital. The
financial projections reflect management's best estimate of economic and market
conditions over the projected period including forecasted revenue growth,
operating margins, tax rate, capital expenditures, depreciation, amortization
and changes in working capital requirements. Other assumptions include discount
rate and terminal growth rate. The estimated fair value of each reporting unit
is compared to their respective carrying values. Additionally, the company
validates the estimates of fair value under the income approach by comparing the
fair value estimate using a market approach. A market approach estimates fair
value by applying cash flow multiples to the reporting unit's operating
performance. The multiples are derived from comparable publicly traded companies
with similar operating and investment characteristics of the reporting units.
The company considers the implied control premium and conclude whether it is
reasonable based on other recent market transactions.

The company performed a qualitative assessment as of October 2, 2022. As a
result of the financial performance indicators for the Residential Kitchen
reporting unit, the company completed a quantitative analysis. The fair value of
the reporting unit exceeded its carrying value by nearly 20% and no impairment
of goodwill was recognized. As a result of the qualitative assessment for the
other two reporting units, the company determined it is more likely than not
that the fair value of our reporting units are greater than the carrying
amounts.

In estimating the fair value of its reporting units, management relies on a
number of factors, including operating results, business plans, economic
projections, anticipated future cash flows, comparable transactions and other
market data. There are inherent uncertainties related to these factors and
management's judgment in applying them in the impairment tests of goodwill. If
actual results are not consistent with management's estimate and assumptions, a
material impairment could have an adverse effect on the company's financial
condition and results of operations.


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Indefinite-Life Intangible Valuations
In performing a quantitative assessment of indefinite-life intangible assets
other than goodwill, primarily trademarks and trade names, we analyze the
variety of events or factors that may impact the fair value of the
indefinite-life intangible, including, but not limited to: macroeconomic
conditions, industry and market considerations, cost factors, overall financial
performance and other relevant factors. We estimate the fair value of these
intangible assets using the relief-from-royalty method which requires
assumptions related to projected revenues from our long-range plans; assumed
royalty rates that could be payable if we did not own the trademark; and a
discount rate using a market based weighted-average cost of capital. If the
estimated fair value of the indefinite-life intangible asset is less than its
carrying value, we would recognize an impairment loss.

Based on the qualitative assessment as of October 2, 2022, the company
identified several trademarks and trade names with indicators of potential risk
for impairment and performed quantitative assessments. In performing the
quantitative analysis on these trademark assets, significant assumptions used in
our relief-from-royalty model included revenue growth rates, assumed royalty
rates and the discount rate, which are discussed further below.

•Revenue growth rates relate to projected revenues from our long-range plans and
vary from brand to brand. Adverse changes in the operating environment or our
inability to grow revenues at the forecasted rates may result in a material
impairment charge.

•In determining royalty rates for the valuation of our trademarks, we considered
factors that affect the assumed royalty rates that would hypothetically be paid
for the use of the trademarks. The most significant factors in determining the
assumed royalty rates include the overall role and importance of the trademarks
in the particular industry, the profitability of the products utilizing the
trademarks, and the position of the trademarked products in the given market
segment.

•In developing discount rates for the valuation of our trademarks, we used the
market based weighted average cost of capital, adjusted for higher relative
level of risks associated with doing business in other countries, as applicable,
as well as the higher relative levels of risks associated with intangible
assets.

As a result of the quantitative testing the company determined there were no
impairments of trademarks. The gross value of the trademarks tested was
approximately $220 million. The fair values of the trademarks exceeded their
carrying values by 10% or more. The company believes the assumptions utilized
within the quantitative analysis are reasonable and consistent with assumptions
that would be used by other marketplace participants.

Kamado Joe and Masterbuilt trademarks
The Kamado Joe and Masterbuilt trademarks are at risk at October 2, 2022. The
fair value exceeded their carrying value of approximately $145.0 million by
approximately 10%. The company believes the assumptions utilized within the
quantitative analysis are reasonable and consistent with assumptions that would
be used by other marketplace participants. Such assumptions are, however,
inherently uncertain, and different assumptions could lead to a different
assessment for the trademarks that could result in a material impairment that
would adversely affect our results of operations.

The fair values of all other trademarks exceeded their carrying values by an
amount sufficient to not be deemed "at risk." The company performed a
qualitative assessment as of October 2, 2022 for all other trademarks and trade
names and determined it is more like than not that the fair value of its other
indefinite-life intangible assets are greater than the carrying amounts.

The company continues to monitor the impacts from the COVID-19 pandemic and
subsequent accelerated recovery, along with inflationary impacts from the war in
Ukraine to assess the outlook for demand of its products and the impact on its
business and financial performance. If actual results are not consistent with
management's estimate and assumptions, a material impairment charge of our
trademarks and trade names could occur, which could have an adverse effect on
the company's financial condition and results of operations.


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Convertible Debt
The company issued convertible debt with debt and equity components. The company
evaluated the different components and features of the hybrid instrument and
determined whether certain elements were embedded derivative instruments which
require bifurcation. Components of convertible debt instruments that upon
conversion may be settled fully in cash or partly in cash based on a net-share
settlement basis are accounted for separately as long-term debt and equity when
the conversion feature of the convertible bonds constitute an embedded equity
instrument. When an equity instrument is identified, proceeds from issuance are
allocated between debt and equity by measuring first the liability component and
then determining the equity component as a residual amount. Prior to January 3,
2021, the liability component was measured as the fair value of a similar
nonconvertible debt, which results in the recognition of a debt discount. The
debt discount amortizes to interest expense, net within the Consolidated
Statements of Earnings, using the effective interest method based on the
expected maturity of the debt. The equity component is reported in additional
paid-in capital within the Consolidated Statement of Changes in Stockholders'
Equity and is not remeasured as long as it continues to meet the conditions for
equity classification.

The company allocated transaction costs related to the issuance of convertible
debt using the same proportions as the proceeds from the convertible debt.
Transaction costs attributable to the liability component are recorded as a
direct deduction from the related debt liability in the Consolidated Balance
Sheets and are amortized to interest expense, net within the Consolidated
Statements of Earnings over the term of the convertible debt using the effective
interest rate method. Transaction costs attributable to the equity component are
netted within additional paid-in capital within the Consolidated Statement of
Stockholders' Equity.

Effective January 3, 2021, the company early adopted ASU 2020-06 using the
modified retrospective approach. The convertible debt is now accounted for as a
single liability and therefore the company no longer recognized any amortization
of debt discounts as non-cash interest expense.

For additional information regarding the company's convertible debt, see Note 5, Financing Arrangements, in the Notes to the Consolidated Financial Statements.



Pension Benefits
The company sponsors pension benefits to certain employees. The accounting for
these plans depends on assumptions made by management, which are used by
actuaries the company engages to calculate the projected and accumulated
obligations and the annual expense recognized for these plans. These assumptions
include expected long-term rate of return on plan assets and discount rates.

The amount of unrecognized actuarial gains and losses recognized in the current
year's operations is based on amortizing the unrecognized gains or losses for
each plan that exceed the larger of 10% of the projected benefit obligation or
the fair value of plan assets, also known as the corridor. The amount of
unrecognized gain or loss that exceeds the corridor is amortized over the
average future service of the plan participants or the average life expectancy
of inactive plan participants for plans where all or almost all of the plan
participants are inactive. While we believe that our assumptions are
appropriate, significant differences in our actual experience or significant
changes in our assumptions may materially affect our pension obligations and our
future expense.

Income taxes
The company provides deferred income tax assets and liabilities based on the
estimated future tax effects of differences between the financial and tax bases
of assets and liabilities based on currently enacted tax laws. The company's
deferred and other tax balances are based on management's interpretation of the
tax regulations and rulings in numerous taxing jurisdictions. Income tax expense
and liabilities recognized by the company also reflect its best estimates and
assumptions regarding, among other things, the level of future taxable income,
the effect of the company's various tax planning strategies and uncertain tax
positions. Future tax authority rulings and changes in tax laws, changes in
projected levels of taxable income and future tax planning strategies could
affect the actual effective tax rate and tax balances recorded by the company.
The company follows the provisions under ASC 740-10-25 that provides a
recognition threshold and measurement criteria for the financial statement
recognition of a tax benefit taken or expected to be taken in a tax return. Tax
benefits are recognized only when it is more likely than not, based on the
technical merits, that the benefits will be sustained on examination. Tax
benefits that meet the more-likely-than-not recognition threshold are measured
using a probability weighting of the largest amount of tax benefit that has
greater than 50% likelihood of being realized upon settlement. Whether the
more-likely-than-not recognition threshold is met for a particular tax benefit
is a matter of judgment based on the individual facts and circumstances
evaluated in light of all available evidence as of the balance sheet date.

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New Accounting Pronouncements

See Note 3(r) to the Consolidated Financial Statements for further information on the new accounting pronouncements.

Certain Risk Factors That May Affect Future Results



An investment in shares of the company's common stock involves risks. The
company believes the risks and uncertainties described in "Item 1A. Risk
Factors" and in "Special Note Regarding Forward-Looking Statements" are the
material risks it faces. Additional risks and uncertainties not currently known
to the company or that it currently deems immaterial may impair its business
operations. If any of the risks identified in "Item 1A. Risk Factors" actually
occurs, the company's business, results of operations and financial condition
could be materially adversely affected, and the trading price of the company's
common stock could decline.


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