JBT (JBT) Up 11.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for John Bean (JBT). Shares have added about 11.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is JBT due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
John Bean Revenues and Earnings Miss Estimates in Q4
John Bean reported adjusted earnings of 92 cents per share in fourth-quarter 2021, which missed the Zacks Consensus Estimate of $1.12. Adjusted earnings per share in the quarter fell short of the company’s quarterly guidance of $1.05-$1.15. The bottom line declined 10% from the prior-year quarter. The company has been witnessing strong demand and improved orders through the quarter but higher material and labor costs negated these gains. Shortages of critical materials, in particular, electronic components, along with labor availability issues, impacted productivity and output at both AeroTech and FoodTech.
On a reported basis, the company’s earnings per share was 99 cents compared with the prior-year quarter’s 94 cents.
Revenues of $498 million lagged the Zacks Consensus Estimate of $519 million. However, the top line improved 13.2% from the prior-year quarter.
In the reported quarter, the company’s total orders surged 19% year over year to $587 million. Orders in the JBT FoodTech segment shot up 25% year over year to a record $455 million. In the JBT AeroTech segment, orders went up 3% to $131.3 million from the prior-year quarter.
Backlog in the FoodTech segment increased 49% from the year-ago quarter to $635 million as of Dec 31, 2021. The AeroTech segment’s backlog was $372 million at the end of the reported quarter, up 30% year over year. Total backlog at the end of the fourth quarter was $1,007 million, up 41% year over year.
Cost and Margins
Cost of sales increased 16.4% year over year to $356 million during the fourth quarter. Gross profit was up 6% year over year to $141 million. Gross margin came in at 28.4% compared with the year-earlier quarter’s 30.3%.
Selling, general and administrative expenses were up 17% year over year to $104 million. Adjusted operating profit declined 19.5% year over year to $37.9 million. Adjusted operating margin was 7.6% in the fourth quarter compared with the prior-year quarter’s 10.7%. In the quarter under review, adjusted EBITDA was around $58 million, reflecting a year-over-year decline of 11.6%. Adjusted EBITDA margin was 11.7% compared with the year-ago quarter’s 15.0%.
Segment Performance
JBT FoodTech: Net sales were $369 million compared with $321 million in the prior-year quarter. Adjusted operating profit amounted to $45.8 million compared with the year-ago quarter’s $43.6 million.
JBT AeroTech: Net sales were $128 million, up 8.4% from the prior-year quarter. The segment’s adjusted operating profit plunged 72% year over year to $3.6 million.
Financial Position
John Bean reported cash and cash equivalents of around $78.8 million at the end of 2021, up from $47.5 million at the end of 2020. The company generated around $226 million of cash from operating activities in 2021, compared with $252 million in the prior year.
The company’s total debt was $674 million as of Dec 31, 2021, up from $525 million as of Dec 31, 2020. In the fourth quarter, JBT renewed its credit facility, expanding the overall line to $1.3 billion, up $300 million from the previous agreement. The expanded capacity and favorable terms in the new financing arrangement led to an increase in liquidity to $703 million as on Dec 31, 2021.
During the quarter, John Bean completed the acquisition of Urtasun, expanding FoodTech's offerings in fruit and vegetable processing.
Guidance
The company expects revenues to improve in the mid-to-high teens in 2022 from 2021 levels. Revenue growth is projected at 12-15% for the FoodTech segment, which includes a 3% contribution from acquisitions. The AeroTech segment’s revenues are expected to increase approximately 15-20% from 2021.
John Bean anticipates the ongoing supply chain and labor challenges to impact margins, particularly in the first half of 2022. Margins are expected to improve in the second half. Overall, the company expects consolidated margins in 2022 to be slightly above 2021 levels.
The company expects consolidated revenues in the first quarter of 2022 to decline in low-double digits on a year-over-year basis. Consolidated margins are expected to lower sequentially. Corporate costs are anticipated to increase by $3 million primarily due to incentive compensation and higher costs associated with the company’s digital strategy efforts.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -34.47% due to these changes.
VGM Scores
At this time, JBT has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise JBT has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
John Bean Technologies Corporation (JBT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
