Despite Mixed Results, Public E&S Companies Grew 3.6% In 2Q

The nine publicly reporting foodservice equipment and supplies companies posted combined revenue growth of 3.6% in the second quarter 2015 versus the same quarter last year. While overall growth was moderate, it was the best quarter since Q3/2014, when sales rose 6.7% and more than a full point ahead of first quarter combined growth of 2.5%. For the first half of the year, combined sales increased 3.1% and reached a milestone: Sales of the nine companies added up to $2.5 billion in the first half for the first time.

A wide disparity in growth rates among the companies continued in the second quarter. The six equipment-oriented companies reported revenue growth of 4.5%, well ahead of first quarter’s 2.8% increase. But the first quarter number was unusual because Manitowoc Foodservice, the largest of the public companies by volume, reported a 9.9% drop in revenues, pulling the combined number down. The other five equipment companies grew revenue 5% in the first quarter. Combined sales of the equipment companies rose 3.7% for the first half of 2015, compared to first half sales in 2014.

The three supplies-oriented companies were off 0.8% in the quarter, including an estimated 15% decline in sales at EveryWare. The company is navigating Chapter 11 bankruptcy and did not report revenues for the second consecutive quarter.

All these numbers are significantly lower than the second quarter results from the broader-market MAFSI Barometer, which is based on sales trend reports from manufacturers’ reps. Equipment sales rose 5.4% in the second quarter in the Barometer while sales of durable supplies were up 4.3% and those of tabletop and servingware rose 4.8%.

Three of the six equipment companies posted strong second quarter growth while the other three were slightly positive or negative. Sales at Rational Americas jumped 12.2% following a 40% increase in sales in the first quarter. The company is benefiting from a restructuring last year. Sales at Middleby Foodservice rose 9.4%. The increase included the benefit of four acquisitions the company completed last year, but sales were still up 5.3% excluding those companies and 7.9% on a constant currency basis. We estimate ITW Food Equipment Group also saw strong gains, with sales up 9%.

After two negative quarters, Manitowoc eked out a 0.2% increase. We estimate Unified Brands sales rose 0.9% while Standex Foodservice reported sales fell 1% in the quarter. Except for Manitowoc, all the companies are positive for the first half.

Among the supplies oriented companies, Libbey Foodservice reported 4.3% growth for its foodservice brands, after posting a 4.4% gain in the first quarter. Sales at Carlisle Foodservice were off 3.3% second quarter following a 2.7% decline in the first quarter. For the first half, the three companies’ combined sales are down 0.2%.