미들비(MIDD) 2026년 3분기 실적 콘퍼런스콜: 사상 최대 매출 및 가이던스 상향

핵심 요약

• 미들비(Middleby)는 2026년 3분기 매출액이 6억 5,260만 달러를 기록해 상업용 외식기기 사업 역사상 분기 최대 매출을 달성했다고 발표했다. 자체(유기적) 매출은 전년 동기 대비 7.7% 증가했다.
• 조정 EBITDA는 1억 5,600만 달러에 달했으며, 마진율은 전년 동기 대비 40bp, 전 분기 대비 90bp 개선된 23.9%를 기록했다. 이번 분기 실적에는 IEEPA(국제긴급경제권한법) 관세 환급에 따른 500만 달러의 혜택이 포함됐다.
• 조정 주당순이익(EPS)은 전년 동기 대비 19% 증가한 2.07달러를 기록했다. 영업활동 현금흐름은 1억 2,300만 달러, 잉여현금흐름은 1억 1,700만 달러였다.
• 경영진은 2026 회계연도 연간 가이던스를 매출 25억 1,900만~25억 3,400만 달러, 조정 EBITDA 5억 8,900만~5억 9,300만 달러, 조정 EPS 7.13~7.29달러로 상향 조정했다.
• 해외 매출은 글로벌 체인 프로그램과 포트폴리오 전반의 판매 확대에 힘입어 14% 증가하며 전체 매출의 30%를 차지했다.
• 스티븐 스피틀이 2027년 4월 1일부로 티모시 피츠제럴드의 뒤를 이어 CEO에 취임할 예정이다. 회사 측은 3개년 성장률, 마진율 및 자본 배분 목표는 변함없이 유지된다고 밝혔다.

주요 재무 데이터

이번 실적은 식품가공(Food Processing) 부문이 중단영업으로 분류됨에 따라 계속영업 기준으로 작성되었다.

사업 및 영업 실적

성장은 고객 채널과 시장 전반에 걸쳐 광범위하게 나타났다. 제빙 및 음료, 조리 및 보온 부문 매출이 모두 증가했다. 신제품 도입과 교체 수요에 힘입어 체인점과 퀵서비스 레스토랑(QSR)이 가장 큰 기여를 했다.

딜러 채널 매출은 전년 동기의 두 자릿수 성장에 따른 역기저 효과로 인해 보합세를 보였다. 경영진은 이것이 채널 내 재고 누적이 아닌 비교 시점의 부담 때문이라며, 딜러들이 미들비의 다양한 브랜드와 제품을 계속해서 폭넓게 판매하고 있다고 설명했다.

아시아와 중동의 어려운 시장 여건 속에서도 해외 매출은 14% 증가했다. 경영진은 중국, 인도, 브라질, 독일을 시장점유율 확대 여력이 큰 시장으로 꼽았다. 회사 측에 따르면 해외 및 미국 국내 매출의 마진율은 현재 유사한 수준을 나타내고 있다.

연중 유기적 성장에는 음료와 가열 조리 제품이 균등하게 기여했다. 글로벌 레스토랑 체인을 겨냥한 미들비의 음료 플랫폼은 영국, 캐나다, 호주에서 운영되고 있으며 추가 시장으로의 확장이 진행 중이다. 경영진은 음료, 제빙, 레스토랑 리모델링 및 주방 후방 설비 투자가 2027년과 2028년까지 이어질 다년간의 성장 동력이 될 것으로 보고 있다.

운영 효율성 개선은 마진 전략의 핵심으로 유지되고 있다. 핏코(Pitco)의 경우 일일 생산량이 약 25% 증가하고 리드 타임이 30% 단축되었으며, 보유 재고 일수는 약 25일 감소했다. 미들비는 테일러(Taylor) 등 대형 브랜드를 시작으로 35개 생산 기지 전반에 린 제조, 설비 합리화, 공급망 이니셔티브 및 80/20 분석을 적용할 계획이다.

회사는 또한 오픈 키친(Open Kitchen) 커넥티비티 및 레스토랑 자동화 플랫폼에 대한 투자를 지속하고 있다. 경영진은 2026년에 커넥티비티 도입이 사상 최고 수준에 도달했으며, 추가 기능 출시에 따라 도입이 계속 확대될 것으로 기대한다고 밝혔다.

경영진 가이던스

경영진은 2026년 4분기에도 전 분기 대비 마진 개선이 이어질 것으로 예상하고 있다. 2026년 8월 단행된 일반 시장 가격 인상, 생산 시설 통합, 공급망 대응 조치, 린 제조 이니셔티브에 따른 초기 효과 등이 주요 견인차로 꼽힌다. 3분기에 500만 달러의 혜택을 받은 IEEPA 관세 환급액은 4분기에는 미미한 수준에 그칠 것으로 회사는 예상했다.

미들비는 2028년 조정 EBITDA 마진율 목표치인 25%~27%를 재확인했으며, 이는 200~400bp의 순마진 확대를 의미한다. 양조 사업 철수는 2027년 1분기부터 2026년 대비 약 40bp의 마진 개선 효과를 가져올 것으로 예상된다.

회사는 3개년 목표치로 순 유기적 매출 성장률 3%~6%, 조정 EBITDA 성장률 6%~9%, 조정 EPS 성장률 10%~15%를 유지했다. 경영진은 테일러와 핏코에서의 운영 이니셔티브가 약 100bp의 마진 개선 잠재력을 지니고 있으나, 그 효과는 2027년과 2028년에 걸쳐 점진적으로 나타날 것으로 전망했다.

리스크 및 주목할 부문

• 테일러를 비롯해 마진이 상대적으로 낮은 부문에서 더 빠른 성장이 나타나면서 제품 믹스가 마진에 부담 요인으로 작용했다.
• 3분기에 인플레이션 전가 속도가 예상보다 완만했음에도 불구하고, 지정학적 요인에 따른 인플레이션이 비용 압박으로 지속 작용했다.
• 전반적인 해외 시장의 견조한 성장세에도 불구하고 아시아와 중동의 일반 시장 환경은 여전히 녹록지 않았다.
• 음료 혁신에 대한 현재의 투자는 분기 및 연초 누계 기준 모두에서 전사 마진율을 약 100bp 낮추는 요인이 되었다. 경영진은 2027년 생산 규모가 확대되면서 이러한 압박이 호재로 전환될 것으로 기대했으나, 연도별 구체적 시점은 밝히지 않았다.
• 린 제조와 광범위한 운영 이니셔티브가 아직 초기 단계에 머물러 있어, 35개 생산 기지 전반에서의 실행력이 2028년 마진 목표 달성에 중요한 변수가 될 것으로 보인다.
• 3분기 마진에는 500만 달러의 관세 환급 수혜가 포함되어 있었으며, 4분기에는 이러한 수혜가 유의미하게 반복되지 않을 전망이다.

애널리스트 Q&A 주요 내용

경영진은 2026년의 성장이 단일 신제품 출시에 의한 것이 아니라고 밝혔다. 또한 음료 프로그램, 매장 리모델링, 해외 매장 확대, 딜러들의 미들비 포트폴리오 채택 확대가 2027년과 2028년까지 유기적 성장을 뒷받침할 것으로 예상했다.

마진과 관련해 경영진은 판가 인상, 공장 단위 생산성 향상, 시설 통합, 음료 생산 규모 확대에 따른 한계 수익성 개선을 강조했다. 단순한 가격 인상보다는 운영 효율성 제고가 2027년 마진을 견인하는 주요 동력이 될 것으로 내다봤다.

경영진은 2027년 추가 가격 인상은 발표하지 않았다고 밝혔다. 향후 조치는 인플레이션 추이에 따라 결정될 것이며, 특히 대형 글로벌 체인을 중심으로 고객, 제품 및 SKU별로 선별 적용될 예정이다.

최종 수요 시장과 관련해서는 3분기 QSR 부문이 견조한 실적을 거두었으며 4분기에도 긍정적인 흐름을 이어갈 것으로 전망했다. 편의점, 캐주얼 다이닝, 패스트 캐주얼 고객군 역시 성장을 기록했다. 경영진은 연말 주문 집중 현상보다는 2026년 말까지 비교적 완만하고 균일한 흐름으로 마무리될 것으로 예상했다.

실적 발표 컨퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and welcome to The Middleby Corporation's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] On today's call are Tim FitzGerald, CEO; Steven Spittle, President; Brittany Cerwin, CFO; and James Pool, Chief Technology and Operations Officer. [Operator Instructions] Please note that today's event is being recorded.

I would now like to turn the conference over to Tim FitzGerald. Please go ahead, sir.

Timothy FitzGerald

Good morning, everyone. Thank you for joining us. Before we get to the quarter, I want to begin with the leadership announcement we made this morning. I'm excited to announce that Steven Spittle has been named to be my successor as Middleby's CEO on April 1 of next year. I will remain CEO through March 31, 2027, and fully engaged as we deliver on our 2026 commitments and to ensure a seamless transition.

Steve will immediately be elevated to serve as President, and he will become CEO on April 1, at which point he will also join the Board. The timing is right as the company embarks on an exciting next chapter as a pure-play Commercial Foodservice business. This year, we completed the most significant transformation in Middleby's history as we separated our 3 businesses into independent companies with the sale of a controlling stake in our residential business to 26North, followed by the third quarter public spin-off of Midera Food Processing.

This succession was planned deliberately and thoughtfully. Steve has the full confidence and support of the Board, myself and our entire organization and no doubt is best equipped to lead Middleby into the next chapter. Within the Middleby team and across the foodservice industry, it will be no surprise that Steve has been selected as the next Middleby CEO. He has earned the utmost trust and respect of the people who buy from us, our partners across the industry and the people who work here.

Steve brings a strong customer focus and deep relationships with chains, dealers and operators. He sees the business from the customer side because he began his career as a representative selling many of our brands. In his 16 years at Middleby, Steve has run some of our larger brands and worked across nearly every part of our commercial business. We elevated Steve to Chief Commercial Officer in 2021 for these reasons, and he has been instrumental in reshaping the organization these past several years as we have implemented the organic growth initiatives that are delivering the results we see today.

I am very proud that Steve will be the one to follow me as CEO. He is an exceptional leader, and I am confident Steve will take Middleby to even greater heights. I'm committed to ensuring a successful transition and a great start to 2027 as he and I continue to partner together over the months ahead. Turning to the quarter. We delivered a strong third quarter. Revenue was $652.6 million, the largest quarter in the history of our Commercial Foodservice business.

Organic sales growth was 7.7%, our third consecutive quarter of high single-digit organic growth. Adjusted EBITDA was $156 million. Revenue, adjusted EBITDA and EPS all finished above the high end of our guidance and margins stepped up sequentially, also ahead of our guidance. Britt will take you through the details shortly. These results reflect the hard work of this team, and I have confidence the strategic initiatives we laid out at our Investor Day in May are driving sustainable results and growing our competitive advantage in the marketplace. I know Steve will only further elevate the bar and bring greater focus to the business as we enter the next chapter. Steve, congratulations. I am excited for you, the Middleby team and what the future holds.

With that, I'll turn the call over to you.

Steve Spittle

Thank you, Tim, and good morning, everyone. I'm honored by the Board's confidence and deeply grateful to you, Tim, for your leadership, the foundation you have built and your support through this transition. I also want to thank the people who have helped influence my career here at Middleby.

First to Paul Angrick, a former Middleby Executive and President of Pitco, who brought me to the company in 2010 and has been a mentor throughout my entire career. And second, to Dave Brewer, our former COO, who named me President of Pitco in 2015 and taught me to build a business focused on the customer. And to my fellow officers, Brittany Cerwin and James Pool and to my Middleby colleagues worldwide, whom I respect greatly. This company runs on your work, and I am proud to stand with you.

I started in this industry as an independent manufacturers representative in Ohio, selling many of the brands that make up Middleby today. That experience taught me what an operator needs for a manufacturer, innovative equipment that works, arrives when promised and is supported after the sale. I have carried the view of the customer across my 16 years at Middleby, and it will shape how I now listen and learn in the months ahead.

First, I want to be clear on where we stand, starting with what is not changing. The strategy and targets we set at Investor Day in May remain firmly in place. These 3-year targets are net organic sales growth of 3% to 6%, adjusted EBITDA growth of 6% to 9%, adjusted EPS growth of 10% to 15% and 200 to 400 basis points of margin expansion. Our commitment to customers, go-to-market strategies and capital allocation framework also hold. We will build on this foundation as a customer-focused, innovation-led and sales-driven organization, bringing the same focus and intensity to operational excellence, turning our top line momentum into the margins our business is capable of delivering.

My first 100 days begin now, and I will spend them visiting our plants and our customers around the world. This is familiar ground as I've spent much of my time at Middleby on the shop floor with our employees and customers. That focus will extend well beyond 100 days because our plants are where we earn customer trust through reliability, on-time delivery and quality. Sharpening that focus extends our commitment to customers while also creating value for our shareholders. We have strong momentum with our customers, having delivered exceptionally strong organic growth this year in a challenging market, including a record top line this quarter.

Our innovations help customers lower costs, improve efficiency and reliability and open up new dayparts. We have also made intentional go-to-market investments. We consolidated our independent sales representatives in the U.S. from 156 groups to 15 today, focused on our top dealers who are now selling more of our product portfolio and built 4 innovation kitchens in the U.S. and Europe to showcase our complete portfolio of products and solutions. Our holistic beverage solution for a global restaurant chain shows this model at work. It unites 5 Middleby companies in 1 platform, now live in the U.K., Canada and Australia with expansion to additional markets underway.

It is one of several such programs and with beverage and hot side contributing equally to organic growth this year, the commercial model is clearly working broadly. We see the same opportunity beyond the U.S. where international can become a bigger share of our growth, and we've invested accordingly, strengthening our teams, adding sales and distribution offices worldwide and opening Middleby, Germany last year. Nowhere is that clearer than in Asia, where we have kept investing through a difficult period. Our 2 world-class plants in Qingdao and Zhuhai build Middleby brands for the local market and are beginning to support customers throughout Asia and beyond in select markets.

Their capabilities have taken a big step forward, and I'm encouraged that these investments are starting to deliver. The international opportunity is twofold. The first is market share. Historically, we have sold a narrow part of our portfolio abroad, mostly fryers and ovens to large global chains. But today, we sell the complete portfolio, including ice and beverage and are reaching emerging chains and local customers. The most room to grow is in markets such as China, India, Brazil and Germany. The second is recovery in the hardest hit markets like Asia.

We believe Asia will rebound and our local plants and teams are ready to grow with it when it does. That is why my plant visits are global. I want to walk those factories myself to see where we can do more. Turning to operations. The work is still in early innings. We have spent the past year laying the foundation for a lean journey and culture that is just beginning and will rapidly accelerate throughout the organization in the year ahead. Pitco, our first true lean application, shows what is possible. Daily output is up about 25%, lead times are down 30% and inventory is down roughly 25 days on hand.

Rather than build a new facility as planned, lean manufacturing principles helped us optimize facility flow, allowing us to run the business from 2 buildings instead of 3 and further improve efficiency. We will apply the same approach across our 35 manufacturing sites, starting with Taylor, one of our largest brands, where top line performance is strong and operational upside is significant. Facility rationalization, 80/20 analysis, supply chain and lean initiatives are all levers to better serve customers and shareholders, and we will pull all of them with urgency while adding deep operational expertise to our team.

An elite industrial compounder pairs strong top line growth with world-class margins, and I intend to hold us to that standard. Operating discipline is the lever most within our control, and that is where I will focus much of my time. We will also continue applying that discipline to our portfolio as we did with brewing. Our path is clear, deliver innovative solutions that help our customers succeed, matched by a culture of operational excellence that unlocks our company's full margin potential. Thank you for your time this morning.

And with that, I will turn the call over to Britt to take you through the third quarter in detail.

Brittany Cerwin

Thank you, Steve, and good morning, everyone. This is our first quarter reporting Food Processing as discontinued operations. Everything discussed today is on a continuing basis and prior year comparisons are restated on the same basis.

Third quarter revenue was $652.6 million, the highest quarterly revenue in the history of our Commercial Foodservice business and above our guidance range of $620 million to $640 million. Organic revenue growth was 7.7% against our guidance of about 4%. Revenue rose about $47 million from the $606 million we reported a year ago. We are proud of our teams achieving this milestone and building the momentum to execute on our targets. Adjusted EBITDA was $156 million against our guidance of $143 million to $150 million and $142 million last year. Adjusted EBITDA margin was 23.9%, which is 40 basis points higher than the 23.5% a year ago and about 60 basis points above the midpoint of our guidance.

Adjusted EPS was $2.07 compared with our guidance of $1.67 to $1.83 and $1.74 last year, reflecting growth of 19% year-over-year. Adjusted EPS is where our model comes together. Organic growth drives our earnings and disciplined capital allocation compounds that growth on a per share basis. Revenue growth was broad-based across customer sales channels and markets. Sales in both our Ice and beverage and our cooking and warming side grew during the quarter. Chains and quick service restaurants were the biggest contributors to growth, similar to the first half, mainly through the adoption of new products and replacement activity. Replacement spending was stable relative to the increased activity we saw in the second quarter.

The dealer channel was roughly flat against double-digit growth in the third quarter last year. International grew 14% and represented 30% of our revenue, reflecting our move to solution selling across the portfolio and leveraging the global strength of our sales and distribution network. International growth was achieved despite challenging near-term market conditions impacting the general market in both Asia and the Middle East. Now to margin. I will speak to total company adjusted EBITDA margin. Margin was 23.9%, up 40 basis points from 23.5% in the third quarter last year.

On a sequential basis, margins were up 90 basis points from 23% in the second quarter. Compared to the third quarter of last year, the current year margin includes a benefit from record sales volume, operating initiatives and pricing due to the realization of the January 2026 price and the $5 million benefit of IEEPA tariff refunds. Consistent with what we communicated in August, the August general market price increase had no benefit in the third quarter. It begins to flow through in the fourth quarter. Mix and geopolitically driven inflation were headwinds that offset the ability to realize further margin expansion. Supply chain initiatives, combined with the realization of the August 2026 price increase are expected to reduce the impact of inflation starting in the fourth quarter.

We also expect to realize savings from several ongoing facility consolidations, including the ice businesses, which will provide initial benefits in the fourth quarter. Our manufacturing excellence initiatives are in flight and are focused at larger divisions such as Taylor and Pitco as we reduce operational complexity and implement a culture of lean manufacturing. These activities are progressing as planned and will provide initial benefit in the fourth quarter and continue to build into 2027.

Additionally, on September 9, we announced our exit of the brewing businesses, which is on track to be complete by year-end. In 2025, brewing generated about $24 million of sales, and an adjusted EBITDA loss of about $9 million. Exiting adds roughly 60 basis points to 2025 for total company margin and 220 basis points to the 2025 ice and beverage margins presented at Investor Day. We will finalize the exit in the fourth quarter, providing a margin uplift starting in Q1 of next year. Please refer to Slide 10 of the presentation we have posted online at our Investor Relations website for full details.

As it relates to our Q3 guidance, margin came in 60 basis points ahead of the midpoint of our third quarter guidance. We want to begin with what we told you on our second quarter call to expect $10 million to $15 million of incremental inflationary costs in the second half. In the third quarter, that headwind was lighter than we expected because inflation has flowed through more slowly, and we realized greater absorption on a record top line. We did realize productivity gains from operational initiatives, offset in part by mix with larger growth in sales at lower-margin divisions, including Taylor. On IEEPA tariff refunds, as we mentioned on the second quarter call, there was an expected $5 million benefit in the second half, of which we were successful in collecting within the third quarter. We expect an immaterial amount of IEEPA tariff refunds in the fourth quarter.

Against our 2028 margin bridge, we remain highly confident in our target of 25% to 27% total company adjusted EBITDA margin by 2028 and the 200 to 400 basis points of net margin expansion. The exit of brewing adds 40 basis points relative to 2026 beginning in the first quarter of 2027. Operational initiatives will layer in next year, including approximately 100 basis points identified at Taylor and Pitco that are underway and will begin to take hold in 2027 with expansion to further divisions expected.

In addition, we continue to execute on our facility consolidation initiatives with the recently completed consolidation of Counterline businesses, ongoing ice business consolidation and recent actions to begin consolidation of 2 oven businesses. The investment in beverage innovation is running at approximately 100 basis point impact to current total company margins on both a quarter and year-to-date basis, which as we scale production to support the launch of these products into 2027 with incremental top line growth over the next several years, that headwind becomes a tailwind.

Operating cash flow was $123 million and free cash flow was $117 million for the quarter. Net leverage was 2.8x, firmly within our comfortable range of leverage. We have been consistent that we will be opportunistic when the market gives us the chance to deploy capital at extremely attractive returns while staying mindful of our leverage. That is what we did this quarter. We repurchased approximately $106 million of shares or 2% of our shares outstanding in the third quarter and $76 million of shares so far here in the fourth quarter. Year-to-date, we have purchased 5.5 million shares or 11% of shares outstanding. Since the beginning of 2025, we have purchased approximately 19% of shares outstanding.

Maintaining prudent leverage levels remains a priority, but the deciding factor is always where we earn the best return on our capital. This quarter, that was repurchasing our own stock. We also expect net leverage to decline naturally as EBITDA grows with our momentum going into 2027, which gives us flexibility in how we deploy cash along the way. Our long-term framework has not changed. We expect to return the vast majority of our free cash flow to shareholders through share repurchases.

Another step in securing the ability to execute on our capital allocation strategy and priorities was the refinance of our existing credit facility. We entered into a 5-year $3 billion multicurrency senior secured credit agreement consisting of a $1 billion term loan facility and a $2 billion revolving multicurrency credit facility. Debt outstanding following the refinance will remain consistent. Covenant calculations as of the third quarter will be reported for the first time, excluding food processing at higher leverage levels. We reaffirm our 2028 target, and we are raising our 2026 guidance.

For the full year, we now expect revenue of $2.519 billion to $2.534 billion compared with our prior range of $2.48 billion to $2.53 billion. We expect adjusted EBITDA of $589 million to $593 million compared with $572 million to $588 million. and adjusted EPS of $7.13 to $7.29 compared with $6.73 to $6.89. We continue to expect sequential margin improvement in the fourth quarter, supported by our ongoing operating initiatives and the realization of pricing.

Looking to 2027, the brewing exit alone gives us roughly 40 basis points of margin tailwind and our plant level operating initiatives, scaling of operations for beverage innovation, ongoing plant consolidations and the full year benefit of pricing all build on top of that. Execution on our 2028 targets is not back-end loaded. Measurable actions are being taken and focus is set on ensuring the portfolio is positioned for long-term growth and margin expansion to deliver on our goals. We are also not done shaping the portfolio. Brewing is one example of the discipline we will continue to apply brands that are dilutive to our margin or growth profile and are not strategic to the core.

With that, I will open the call to questions.

Operator

[Operator Instructions] And today's first question comes from Jeff Hammond with KeyBanc.

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Jeffrey Hammond

Just wanted to congratulate Steve on the announcement. And Tim, certainly, congrats to you as you move on to the next phase. Certainly appreciate all the time and the dialogue. Just on -- I guess, the growth has been really impressive versus a pretty choppy end market. And I'm just wondering, as you kind of go into fourth quarter and '27, do we see that kind of building, sustaining? Do we have to worry about maybe some of these big program wins hitting comps? Just how sustainable do you feel that outgrowth is?

Steve Spittle

Jeff, this is Steve. First of all, thank you for the kind comments to start. I think the way I would think about it is that we continue to see strength across all channels, and we don't view what we've delivered this year as being one-off or having one specific project or rollout drive the growth. I think if you're listening to what customers are saying publicly, especially with some of their calls this quarter, they're continuing to talk a lot about beverage programs, which we've talked a lot about and remodels as a central part of their next phase of growth, certainly into '27 and in particular, actually into '28.

So there's multiple examples that we've referenced before of the customers that are adopting the new beverage platforms that we are driving. In some cases, they are in several thousand locations and continuing to grow into 2027 and beyond. I think the other thing that you're starting to hear from our chain customers more and more is the emphasis on going back and remodeling locations, which has a replacement benefit to us as well.

So to me, Jeff, when you see and hear our largest operators in the industry building growth plans around beverage and back-of-house investments, it is a true multiyear tailwind and not necessarily a single year 2026 event. And again, I think that's where categories with ice and beverage and cooking platforms for us have us very well positioned, and that's why we're confident in sustained organic growth through -- to finish certainly this year, but into '27 and then into '28 as well.

Jeffrey Hammond

Okay. Great. And then, Brittany, a lot of good color on kind of the margin bridge and margin improvement opportunities into '27. So I just want to unpack that a little bit. So you get 40 basis points from exit of brewing. And then I guess I'm wondering, as you transition into '27, how much do you think of this 100 basis points from Taylor and Pitco and how much of this kind of 100 basis point beverage headwind becomes less negative or neutral or positive? And maybe just to think about it holistically, like in a flat environment, how much margin improvement do you think you can get into '27?

Brittany Cerwin

Thanks, Jeff. Yes, I think as we look at it, I think on the beverage side, we continue to make those investments this year. But as we scale the production and as the top line expected growth comes in, we expect to see that start to ramp in 2027 and become a tailwind instead of a headwind that we're currently seeing. We haven't been specific about the exact amount between 2027 and 2028, but it is something that we have built into our projections as we look to the 2028 targets.

As it relates to Taylor and Pitco, again, we're starting to see some of those initial benefits on the productivity from the lean manufacturing. But again, the flow-through to the bottom line as we start to see some more of that margin expansion will start to build in 2028 as we gain more traction there and continue to reduce complexity and continue to flesh that out also across other divisions throughout the platform.

So I do believe what we've called out is Taylor and Pitco, and we will continue on a periodic basis to update everyone as we're executing to those. Right now, we believe those are on track as we've planned, and we will report out on a consistent basis. But we do see further benefits as we roll that through the platform and execute on those 2028 goals.

Operator

Our next question comes from Mig Dobre with Baird.

Mircea Dobre

Right, Steve, congratulations. I just want to pick up where Jeff left it here. Maybe, Britt, you can comment a little bit on price cost and almost a reminder, if you would, as to how all of this impacted 2026. And based on everything that you know in terms of your cost base materials, freight and the pricing that you're putting through, what does that look into 2027? Are we caught up relative to 2026? Is that headwind or maybe a tailwind? How do you think about that at this point?

Brittany Cerwin

Yes. Thanks, Mig. So I think the first thing to comment about is in the third quarter, obviously, we had the realization from the low single-digit price increase that we put in, in January 2026. And really, that's consistent with what we said in August is that the pricing that we announced in August for the general market price increase, we will start to realize in the fourth quarter. I think we still had those inflation headwinds, and we will continue.

But as that kind of went through a little slower in the third quarter, that timing really benefits us as we continue to ramp on some of these additional operational initiatives and facility consolidations. As we look to 2027, we have not announced anything in terms of pricing to date, but I think we will continue to be mindful and watch the inflation that impacts our business while being strategic about pricing with our large chain customers and adjusting as appropriate.

Mircea Dobre

All right. Maybe to press you a little more on this issue. If I sort of take the IEEPA benefit that you had in the third quarter and I adjust for that and then I kind of look at your fourth quarter guidance, the incremental margins kind of go from somewhere in the low to mid-20s to something north of 30%, which that looks pretty good to me. I'm curious as to exactly what gets us there sequentially.

Maybe it's pricing, as you said, maybe it's something else. But can we underwrite this type of incremental margin into 2027 based on all the comments you've provided thus far?

Brittany Cerwin

Yes. I think that's -- your observation is spot on. I think that's where we do expect that our incrementals will start to grow as some of these operational initiatives at our larger divisions, such as the Taylor where they have strong top line growth, and we continue to execute on these lean manufacturing and initiatives. Also the facility consolidations that we have is an ongoing initiative for us that will continue to provide benefit not only in the fourth quarter, but carry us into 2027 as well.

So I do believe that along with also the beverage investment starting to turn into more of a tailwind in 2027, give us the confidence that those incrementals will start to become stronger as we move into 2027.

Steve Spittle

Mig, this is Steve. If I could just add on to that and echo what Britt said. But back to some of the prepared comments at the beginning of the call, and this is why so much of my own focus going into next year is going to be on the operational side of our business. It's great, as I highlighted, that we're seeing the early wins from a Pitco where they're the earliest and probably furthest along in their lean manufacturing journey. But it's how do we continue to build upon that. It's building a culture around lean. And it's great when you have very tangible wins at Pitco that we can then carry across the rest of the organization.

So as we think about margins, pricing is always a lever that we have been, I think, effective with over the years. but it's not the only tool in the tool belt, if you will, but really controlling our own destiny from a manufacturing standpoint and operational excellence standpoint will really be the primary focus of how we're driving margins in the next couple of years.

Operator

And the next question is from Tami Zakaria with JPMorgan.

Tami Zakaria

My first question is, I remember you were going to lap a very strong restocking tailwinds in your distribution channel from last year, which was part of the reason the way you guided your organic growth. So as you lapped those strong growth rates in 3Q, can you comment how your channel did year-over-year in terms of volume?

Steve Spittle

Tami, this is Steve. You're correct. The back half of last year is where we started to see an increase -- a substantial increase in growth within our dealer channel, primarily in the U.S. It wasn't really from a stocking or restocking position, right? It's not loading up the channel with inventory. It really was a function of a lot of time and investment that we've made in driving behavior within the dealer segment.

It comes back to a lot of project work that was pent up that started to flow through, but really is the dealer channel selling a broader portion of our brands. I've talked about before that if you go back over the last 5 to 10 years, the dealer channel supports our core brands, the Pitcos, the Blodgetts of the world. But where we've seen incremental growth really starting the midpoint of last year is now they're starting to sell our ice brands. They're starting to sell the TurboChefs. We're starting to sell our combi, and that has really been where we've seen momentum. That momentum has continued into this year. We are, as we said, comping stronger back half of the year in this quarter, and it has essentially run flat in the third quarter, which Britt called out.

That should not be read negatively. It should be read as there continues to be a lot of momentum. Projects ebb and flow from quarter-to-quarter. but it's a function of lapping the strong back half of the year, but we continue to see very good momentum, very good alignment across the dealer channel in supporting our brands and expect that to continue to finish out the year and into next year as well.

Tami Zakaria

Understood. That's very helpful. And you mentioned opportunities outside the U.S. It seems like it continues to grow. How would you compare profitability of these international markets versus the U.S.? How wide is the difference in margin right now? And can those eventually converge?

Steve Spittle

Yes. Tami, correct. We see international as a major opportunity. You're seeing, obviously, in the quarter itself, most of our international markets did very well. On the strength of some of our chain programs that we're a part of as well as the local teams growing more with emerging chains in their local markets. Continue to see that as a strong driver of growth, both with chains and local chains for next year.

In terms of the margin profile of international sales versus domestic, they actually run pretty similar today. There really would not be a major difference between the 2. So as international grows, it should be only a margin tailwind for us or margin accretive, especially as we continue to grow it. It also puts a lot of emphasis on, as I mentioned in my prepared remarks, the more and more we're leveraging our China manufacturing facilities, I referenced we have 2 great facilities in Zhuhai and those are becoming critically more important of building products in those facilities that we're not only selling within China, but we're actually starting to support our customers outside China and parts of Europe and parts of Asia, parts of India as well. So that plays a critical role, and that is very helpful from a margin perspective as well.

Operator

And our next question is from Ian Zaffino with Oppenheimer.

Ian Zaffino

Can you guys maybe talk about the pricing environment a little bit and how you're going to market with that? I know that you've always been the leader and -- but just wondering if there's any kind of price fatigue you're seeing out there?

And then I know initially, I think some of the customers were saying that some of this inflation is temporary because of the war and it's continued. So has that tipped the pricing environment more in your favor given that some of these inflationary headwinds are still there and aren't necessarily going away anytime soon?

Steve Spittle

Yes. This is Steve. Thank you for the question. Again, I think over the last 4 or 5 years, we have done a very good job of getting pricing through the market to keep up with the inflationary environment that we've had to deal with going back to really the supply chain challenges from '22 and '23 and then the period of strong inflation, which obviously has continued into this year.

I think the fact that we have done a good job on pricing has allowed us to be very thoughtful about where we are from a competitive standpoint in the marketplace because we know that's always a balance that we have to find. I think as we go into next year, we're very thoughtful about our pricing with chain customers, global chain customers and not maybe as much of going to the general market. It's much more strategic in pricing at the product level, at the SKU level to make sure we're where we need to be. But this also does come back to knowing it is a challenging environment, controlling other parts of our costs and our margins that are in our control, and this is why I'm so emphatic about the operational initiatives that I think are going to be a critical part of next year.

So that's why I think that is certainly more in our control. Pricing is always a lever, as I commented earlier, but really leaning in more and more to the operational excellence initiatives will be the biggest driver for our margin in '27.

Ian Zaffino

Okay. And then can you also maybe talk about, again, the current environment? I know there's a lot of innovation out there. I know you have something like the KFC Kwench. And how is that -- how is some of the new innovation being received right now, just given the environment in general, are you seeing more receptivity to it? Would you be seeing maybe less receptivity to it, just given where we are?

Steve Spittle

Yes. Great question. I think the headline answer is our customers are very receptive to the new technologies and innovations. A question we get often is what are metrics that you can look to, to help better understand how large chains and chain operators are thinking about their own CapEx? And is it same-store sales? Is it traffic? Those are all historically always important.

I think there has been divergence this year in particular. And it's because of these new innovations that we're talking about is the fact that the very proactive and progressive chains are not waiting anymore. They have released projects and a lot of them, again, are focused on driving new dayparts to the restaurant. They're focused on beverage platforms, they're focused on ice platforms. And this is why the fact that we've been able to build up a complete portfolio of beverage brands, beverage solutions is why we're winning. And obviously, we've called out the one big chain that you've referenced, and we're powering that entire rollout at this point and expect that to continue.

And again, apply that same concept across multiple chains which they've been very public about. And you can see the answer to the question of why, yes, chains and customers are very keen and very open to adopting our new innovations because it's helping them make their business better. It's helping them drive new dayparts and increase their sales.

Operator

The next question is from Chris Senyek with Wolfe Research.

Christopher Senyek

Great quarter again, and love to see the buyback very opportunistically, which has proved to be very good given the stock price move recently. So could you unpack the major end markets a little bit more and what you're seeing and what you saw kind of during the quarter, QSRs, C-stores, emerging trends? Are the trends becoming more concentrated, they're broadening, how that kind of trended during the quarter?

And then kind of what your assumption is into the fourth quarter for kind of just -- is it expected to be sort of somewhat linear, it's back-end loaded? Any color on that would be super helpful.

Steve Spittle

When I think about the various end user markets, again, we do focus a lot on the QSR segment. And that segment, in particular, which is a large portion of our business did very well in the third quarter. We would expect that to continue into the fourth quarter. It's historically or maybe I'll call it, pre-COVID, you would potentially see trends of some chains backloading their development into the fourth quarter. That really has gone away the last several years really since COVID.

So it's a lot more of a linear finish to the year, but linear in a very positive direction. So QSRs, and again, I've called it out, a lot of international growth. That's definitely going to be their focus currently and their new store development is very internationally focused in '27 for sure. We're talking about the new daypart and new beverage and ice they're adopting. So that's very focused on QSRs.

If you look at other end markets, C-stores, again, is maybe a category we haven't talked as much about. We've made a lot of investments in our relationships within C-stores. It's also very heavy in beverage, ice, rapid cook, ovens. So we're very well positioned there, again, did very well in the quarter. Casual dining, fast casual also did well in the quarter. So really, across our multiple segments and multiple end channels for the third quarter, it was positive growth and expect that to continue into the fourth quarter and frankly, into '27.

Christopher Senyek

Great. And then in terms of recent margin trends in ice and beverage, I know some of the products are ramping new ice launches, Gravity, FizzBot, others. How should we be thinking about that as we kind of reach operating leverage, all that stuff with respect to sales as those ramp up as we get into 2027. Is there some ramp we should expect in terms of incremental margins? How do those look versus maybe overall? Any color would be helpful as you sort of ramp up those product rollouts?

Brittany Cerwin

Yes. Thanks. I think as we talked about with the comparison to the margins that we showed at Investor Day, one of those initial levers starting in 2027 is the removal of the brewing business and exiting there. That will enhance the margin profile of the Ice & Beverage businesses. Also, as you mentioned, right now, we have the investment into the innovation and the standup of production and manufacturing capabilities. So we expect that to start to scale in 2027.

As production increases and those products are launched. And then there will be expected top line growth as those products take hold in the marketplace. So it will continue to grow throughout there. I think we've talked about some other items as well as the ice business consolidation. And just like we're doing on Taylor and Pitco, some of these lean manufacturing and product simplification items that we've mentioned, we're going to be continuing to push throughout the entire product portfolio.

So that application will continue to allow that platform to continue as we move throughout our 2028 targets to come closer to what we had expected in those higher margins that we've seen on the cooking and warming side.

Operator

And the next question is from Tim Thein with Raymond James.

Timothy Thein

Congrats again to both Tim and Steve, very well deserved for both of you. The first question I had was just on the kind of the concept of innovation. That's obviously one of the growth pillars for Middleby. We've talked a lot over the years around technology investment around things like IoT and controls and connected kitchen, et cetera. Where do you think that -- I think that in terms of the ultimate uptake you could argue has been maybe mixed.

And obviously, the industry has been dealing with some real challenges historically so -- or not historically, but in recent years, just in terms of some of your key customer segments. So where does Middleby see that going in terms of -- are you stepping on the gas or are you pulling back? And I'm just curious how that -- to the extent there's a change in the influence, how that may impact margins going forward to the extent, again, that investment -- yes, so anyways, maybe that's enough to start with. So just the spending and how that flows through into the margin trajectory.

James K. Pool

Yes. Tim, it's James Pool. Thanks for the question. I mean we're absolutely continuing to invest in IoT with our leading Open Kitchen platform. This year alone, we saw kind of record connectivity across Middleby given we're finally at scale kind of at the beginning of the year with connected products. So now we're able to offer the broadest portfolio of connected products at the point of sale with our dealers and for our chain customers that are looking at Middleby solutions.

Additionally, outside of connectivity to the equipment, our open kitchen platform is also winning on the restaurant automation side with its EMS platform and HVAC and lighting control capabilities, which drives substantial ROI for our customers. And with the connectivity, the restaurant automation, it's really enabling us to continue to win rollouts as we did in '26 and moving into '27 because of these investments and connectivity across the various Middleby brands. So our foot is still on the gas as it relates to Open Kitchen, and we expect connectivity to continue to grow year-over-year as we add new features and benefits to the Open Kitchen platform.

Timothy Thein

Got it. Okay. Maybe we talked a lot about the potential '27 growth outlook. But maybe just circling back, and apologies if I missed it, but you're growing kind of 8-ish percent year-to-date, the step down in terms of the year-over-year growth in the fourth quarter. I know you have the dealer -- the kind of the channel issues we talked about earlier that helped last year, but you're also benefiting a bit more from price, I think, in the fourth quarter. So is there anything worth calling out in terms of just -- again, it's more at the margin, but just in terms of that growth decelerating in the fourth quarter, anything worth calling out behind that?

Steve Spittle

Tim, this is Steve. I don't -- I think a lot of the trends continue that we've talked about. I think as I think about more 2027, when I think of the 3 or 4 various channels of -- if I were to bucket our customers into and how their growth algorithms work into next year, I think, again, start with the dealers, which we talked about. Again, we've had tremendous momentum starting in the back half of last year. I expect that continued very steady growth to continue into '27.

Again, that's from adoption of new products, selling the complete portfolio, et cetera. I think the second area of growth is in international markets, which I keep talking about. It's where our large chain customers are growing. Their new store opening pipeline for next year is as robust as it has been for the last several years. We'll see how timing of development rolls out, but there is a very good pipeline of international growth. And then you -- and then really the third bucket would be this adoption of new innovations, new products.

Obviously, we keep talking about ice and beverage. That's a huge area of growth for us in '27, '28. So when I think about the 3, it's like the dealers is the foundational growth that I think is just very steady, international new store openings, new development, especially with chains and as we move into more emerging chains and local customers area of growth. And then you have the third bucket of growth, which is that new product adoption. And that's why I think we have confidence in the -- not only finishing the fourth quarter, but how we continue to grow into next year.

Timothy Thein

Got it. Okay. Just a quick clarification. On that international growth, the way that Middleby discloses domestic versus international, if Taylor is selling a product that's produced in the U.S. and it's going to a chain in Germany, does that show up the way you disclose it domestic or international?

Brittany Cerwin

It's international. It's based on ship to.

Operator

And this concludes today's question-and-answer session. I would now like to turn the conference back over to Tim Fitzgerald for any closing remarks.

Timothy FitzGerald

Yes. Thank you again for all that have joined today's call. In closing and wrap up, I'd just like to say I know firsthand, Middleby could not have 2 more capable and committed leaders taking Middleby forward into the next chapter than Steve Spittle and Brittany Cerwin. They both exemplify what it means to be Middleby and the company is in their great hands with a bright future ahead. As a shareholder, I am more excited than ever. Middleby is competitively positioned stronger than any time in its history with transformational initiatives underway and a team that will take the business to new heights under Steve's leadership.

To all my Middleby colleagues, I'm grateful for the journey we've shared building Middleby into the amazing company it is today, and I look forward to seeing many of you in the months ahead as we all work together to support Steve as he takes the reins and ensure the next chapter of Middleby is off to a great start. Thank you all.

Operator

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