Public E&S Companies Grow 7.5% In The Third Quarter

Blended revenues for seven large publicly traded equipment and supplies companies rose again in the third quarter, the sixth consecutive quarter of gains versus the year prior. Reported combined revenues for the group, less the effects of major acquisitions primarily by Middleby Corp., were up 7.5%.

This was slightly slower than the 8.5% gain in the second quarter, but ahead of the first quarter rise of 6.7%. The third quarter increase also comes on top of a 6.7% gain in the third quarter ’10.

The five equipment companies posted an even stronger 9% increase; the two supplies companies saw blended sales rise 1.7%.

The blended gain for the first nine months of ’11 is a quite robust 7.8%. The increase is even more impressive because it is mostly real. Though most E&S companies have been trying to raise prices, they have experienced a great deal of push back, especially from the larger chain customers that are driving the gains. Equipment blended sales are up 9.3% for the nine month, supplies 1.6%.

While the numbers are healthy in aggregate, a company-by-company analysis shows a distinct split in the market between chain- and spec-market orientation. Only four of the seven companies reported gains for the third quarter, but those gains were strong. On the equipment side, Standex Foodservice, Manitowoc Foodservice and Middleby posted double-digit increases of 11.7%, 10.2% and 10.1% respectively. Libbey saw a 4.8% jump, a strong gain on the generally less volatile supplies side. While the sales mixes of all four are different, sales of these four are more driven by chain or commercial segments.

Hobart Foodservice, Rational Americas and Carlisle Foodservice are more oriented toward the spec and noncommercial segments. All three reported declines in sales in the third quarter. Hobart was off an estimated 3.2%, though it remains 4.8% ahead for the nine months. The entire ITW Food Equipment Group, which includes the group’s other foodservice equipment brands, international operations, service and retail, reported a 4.9% gain for the quarter and is up 7.8% for the nine months. Rational America saw a 6.4% drop for the quarter, though that result was affected by pronounced changes in the Euro-dollar exchange rate. Rational is up 17.2% for the nine months. Carlisle, which includes healthcare brand Dinex, saw sales fall 3.6% for the third quarter. Revenue is essentially flat for the nine months.

In comparison to the public increase of 7.5% for the quarter, the broader MAFSI Business Barometer also had a good gain of 4.4% third quarter, as we reported in the Nov. 22, 2011 edition of FER Fortnightly.