Public E&S Companies Up Only 1.3%, But Totals Mask Underlying Strength

Eight publicly reporting foodservice equipment and supplies companies saw combined revenues rise only 1.3% in the second quarter 2016 versus the same period in 2015. But divestitures and soft retail and foodservice chain sales at two of the companies mask strong gains from the remaining six companies. The numbers are compiled exclusively for FER Fortnightly by John Muldowney, principal at Clarity Marketing.

With sales declines at Manitowoc Foodservice, mostly a result of the divestiture of Kysor Panel, and Standex Foodservice, driven by declines in retail chain refrigeration sales, removed, combined sales of the remaining six equipment- and supplies-oriented companies were 9.9% higher 2Q/16 vs. 2Q/15. These gains were achieved despite a slowdown in big chain traffic and same-store sales during the quarter that even those with strong gains noted. In comparison, 2Q/16 vs. 2Q/15 comp sales reported by manufacturers’ reps for the MAFSI Business Barometer rose 4.9% (see story this issue.)

Combined 2Q/16 sales of the six equipment-oriented companies rose 1% compared with the 2Q/15. Manitowoc Foodservice, the largest of the six in sales, was down 9.6% while Standex Foodservice’s comparative 2Q sales fell 9%. But factoring out the effects of the Kysor Panel divestiture as well as costs associated with the company’s purchase of the 50% of Welbilt Thailand it didn’t own, Manitowoc’s organic sales were off only 1.5%. Standex sales have been hurt by mergers among retail clients and a slowdown in new unit building by its big drugstore chain clients. But the company said in its 2Q filings that the negative retail impacts are coming to an end. On a positive note, Cooking Solutions Group sales, which have been off for nearly two years because of manufacturing issues, rose 5% in the quarter.

On the other hand, 2Q comp sales at Middleby Corp. rose 11.1% including the benefit of acquisitions, and ITW’s North American Food Equipment Group sales rose an estimated 9% on strong gains in cooking, warewashing and refrigeration product lines. Rational North America sales were up 19%, with strong gains in Canada, as it continued to benefit from last year’s sales restructuring. And 2Q sales at Unified Brands rose an estimated 2.5%, the same as its 1Q/16 gain.

The two supplies-oriented companies, Libbey Foodservice and Carlisle FoodService, had positive second quarters, with combined sales versus 2Q/15 up 3.4%. Libbey’s foodservice sales rose 3.9% and Carlisle saw a 2.4% gain. Despite the numbers, both companies mentioned the slowdown in chain sales and traffic and Carlisle said its Dinex healthcare business had slower growth.     

For the first half, the eight companies combined sales are up only 1.7% with the equipment companies up 1.1% and the supplies companies posting a 5.3% gain.