Standex reports $6.3 million 3Q loss as Covid hits restaurant industry
Fourth quarter looks weaker as well, company reports
Standex International Corp. lost $6.3 million in its third quarter, primarily due to the selloff of its refrigerated and cooking solution groups, but also because the food operations it retained suffered losses, and will likely continue to lose money in the fourth quarter, the company said.
Standex said the continued losses will be due to the shutdown and then slow reopening of restaurants amid Covid-19 pandemic.
But Standex, which has operations in China, got an early glimpse of the economic impact of the pandemic, and has been well positioned for it, the company said.
Even so, the “the company expects that each of its segments will experience some sequential revenue decline as a result of the Covid-19 pandemic” in the fourth quarter as well.
As for the last quarter, which ended on March 30, revenue fell by over 3% compared to the same quarter a year earlier, to $160.5 million.
That revenue drop was across all its operations, and operating income fell as well, but the deepest loss was the in the refrigerated and cooking solution groups, which Standex sold off in two third-quarter transactions for a total of $31.6 million.
Those discontinued operations lost $22.4 million last quarter. Add on a $20 million impairment charge, offset by a $4 million tax write off, and the company ended up reporting a $18.3 million loss discontinued operations, more than wiping out profits from existing operations.
Standex still has a display merchandising and water pump business that sells products to restaurants and drug stores. Those lines did produce some increased revenue in the third quarter, but “The food service segment is likely to have the most significant sequential decrease in revenue as restaurants around the United States remain closed or focused solely on takeout sales.”
The pandemic also hurt the company’s electronic division, because of reduce capacity at its China plants and automotive plant shutdowns in Europe. Engineering was hit with lower aviation-related sales but increased sales in the space market. And hydraulics was hurt because of a slowdown in the garbage hauling market.