Will FoodTech Performance Drive John Bean's (JBT) Q2 Earnings?
John Bean Technologies JBT is scheduled to release second-quarter 2023 results on Aug 1, after market close. With the company set to become a pure-play provider of food and beverage solutions following the impending sale of its AeroTech segment, investors are keen to see how the FoodTech segment fares. The segment is likely to have benefited from improved order levels, the easing of supply-chain issues and the ongoing momentum in recurring revenues.
Factors That are Expected to Have Aided FoodTech’s Q2 Results
Improvement in Orders: The FoodTech segment’s order levels declined 1.4% year over year in the first quarter of 2023, reflecting muted customer spending amid inflationary pressures. However, it marked improvements from declines of 8.8% and 5.1% suffered in the third and fourth quarters of 2022, respectively.
The segment has since been witnessing a high level of customer interest for products and solutions that enhance automation, operating efficiency and sustainability. Factoring this trend, our model projects 7% year-over-year growth for the segment’s orders to $423.6 million.
Benefits from Easing Supply Chain Headwinds: The shortages of critical raw materials (particularly electronic components) and labor impeded John Bean’s production and deliveries in 2022 as well as in the first quarter of 2023. The supply-chain dynamics have improved through the second quarter of 2023, which is expected to have benefited the segment’s deliveries and helped lower its backlog levels. The FoodTech segment’s backlog is expected to be $672.8 million at the end of the second quarter, whereas it reported $678.3 million in the first quarter of 2023.
Gains From Higher Mix of Recurring Revenues: The FoodTech segment reported 9% year-over-year growth in sales to $388.5 million in the first quarter. Organic growth was 2%, whereas acquisitions contributed 10%. The segment has been performing better than expected, backed by the higher mix of recurring revenues (56% in the first quarter of 2023). Revenues from aftermarket parts and services, and lease and long-term service contracts are considered recurring revenues and the same helps generate high margins.
Backed by these abovementioned drivers, our estimate for the FoodTech segment’s revenues for the second quarter is pinned at $429.1 million, indicating 8.9% year-over-year growth. Organic growth is estimated to be 4.9%, which suggests an acceleration from organic growth of 2% reported in the first quarter of 2023.
The acquisitions of Bevcorp and Alco-food-machines GmbH & Co. KG are expected to have favored FoodTech’s top line in the quarter under review. We have factored in growth of 5.6% from these acquisitions. An unfavorable foreign currency impact of 1.6% is expected to negate some gains.
The segment is likely to report an operating profit of $53.6 million, which suggests growth of 6.8% from the year-ago quarter’s reported figure of $50.2 million. Adjusted operating income, per our model, is pegged at $54.6 million, which excludes merger and acquisition-related costs of $1 million.
Overall Q2 Expectations for JBT
The Zacks Consensus Estimate for John Bean’s total revenues for the second quarter of 2023 is pegged at $587.4 million, indicating year-over-year growth of 8.3%. This is likely to have been aided by improved top-line performances in both segments.
The consensus mark for earnings is pegged at $1.12 per share, which indicates a 0.9% decline from the prior-year quarter’s actual. The company has been bearing the brunt of material inflation and higher labor costs, albeit at a lower magnitude. This, along with higher interest expenses, is expected to have weighed on its earnings performance.
John Bean Technologies Corporation Price and EPS Surprise
John Bean Technologies Corporation price-eps-surprise | John Bean Technologies Corporation Quote
JBT’s bottom line beat estimates in three of the trailing four quarters and missed the same in the remaining one. JBT has a trailing four-quarter earnings surprise of 8.5%, on average.
What Our Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for John Bean this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. That is not the case here, as you will see below. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for JBT is -29.31%.
Zacks Rank: The company currently has a Zacks Rank of 3.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Products stocks, which, according to our model, have the right combination of elements to beat on earnings in their upcoming releases.
Terex Corporation TEX, set to report earnings on Aug 1, has an Earnings ESP of +2.14% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Terex’s fiscal second-quarter earnings is pegged at $1.61 per share, suggesting a year-over-year improvement of 50.5%. The company has a trailing four-quarter surprise of 27.1%, on average.
RBC Bearings RBC, set to release earnings on Aug 4, currently has an Earnings ESP of +1.35% and a Zacks Rank of 2.
The consensus estimate for RBC’s earnings for the second quarter is pegged at $1.97 per share. The estimate indicates year-over-year growth of 10.1%. The company has a trailing four-quarter surprise of 12.4%, on average.
Ingersoll Rand IR, scheduled to release earnings on Aug 2, has an Earnings ESP of +0.85% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for IR’s second-quarter earnings is pegged at 59 cents per share, indicating 9.3% year-over-year growth. The company has a trailing four-quarter surprise of 12.6%, on average.
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Terex Corporation (TEX) : Free Stock Analysis Report
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John Bean Technologies Corporation (JBT) : Free Stock Analysis Report
