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John Bean (JBT) Bets on Robust Order Levels and Acquisitions
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John Bean Technologies Corporation (JBT - Free Report) will benefit from the recent improvement in order trends in both its segments — JBT FoodTech and JBT AeroTech. The company’s strategic acquisition program focused on companies that add complementary products, and efforts to develop innovative products will drive growth as well. Focus on process optimization efforts and its cost-cutting actions will aid margins.
Improving Orders to Fuel Revenues
In second-quarter 2021, the company witnessed a 68% surge in orders to $580 million compared with the prior-year quarter. Orders in the JBT FoodTech segment climbed 51% year over year. The segment has been witnessing sequential improvement in order levels over the past four quarters. Due to the pandemic, the food industry has experienced a surge in retail demand driven by packaged food purchases and positive recovery for certain customers across the food industry, specifically those in the quick service restaurant drive-through businesses and those servicing the sustained "eat-at-home" trend. The company reported robust orders for its automated guided vehicle business. This is expected to continue in 2021, which bodes well for the FoodTech segment.
The AeroTech segment’s orders soared 123%. Passenger airline industry contributes a significant portion to the segment’s revenues. Passenger air travel has been picking up from 2020 levels, courtesy of vaccination initiatives globally and re-opening of travel routes. Airport infrastructure spending, which is subject to long lead time contracts, is expected to remain healthy for the balance of 2021. Aftermarket revenues are also gaining steam as equipment utilization increases for customers in line with air traffic demand.
Upbeat 2021 Guidance
Backed by solid results so far this year and order trends, the company now projects adjusted earnings per share between $4.60 and $4.80 for 2021, up from the prior projection of $4.40-$4.60. The mid-point of the range suggests growth of 19% from 2020. The company expects total revenue expansion of 10% to 13% for the full year.
Cost Reduction to Drive Margins
John Bean has been delivering strong EBITDA margin performance, driven by the company’s recent process optimization efforts and JBT Operating System discipline, and rapid implementation of cost-cutting actions. In third-quarter 2020, the company implemented a restructuring plan for manufacturing capacity rationalization affecting both FoodTech and AeroTech segments. These restructuring actions are expected generate incremental cost savings during 2021. John Bean’s Elevate plan is likely to drive continued growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance yield and productivity. These efforts will help the company counter input cost inflation that is currently plaguing the industry.
Concerted Efforts to Grow Business
John Bean intends to ramp up initiatives that were previously underway to bring automation solutions to the protein market. Liquid Foods’ end products such as juice, canned foods and ready meals continue to witness high retail demand. The protein market has a total estimated market size of $18 billion. The Liquid food market has a worth of $8 billion. The company has ample scope to grow in both markets.
The company is capitalizing on its extensive installed base to expand recurring revenues (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. In AeroTech, the company plans to continue developing advanced military product offerings and customer support capabilities to service global military customers.
Acquisitions Remain a Key Catalyst
John Bean has a strategic acquisition program focused on companies that add complementary products, which enable it to offer more comprehensive solutions to customers. In the last few years, the company acquired Proseal UK Limited, Prime Equipment Group and certain assets and liabilities of MARS Food Processing Solutions. Earlier this year, the company bought AutoCoding Systems to fortify its abilities in the growing global market for in-line coding and inspection solutions. Its latest acquisition of Prevenio expands recurring revenue stream and ability to address food safety needs of customers. Prevenio is expected to generate annualized run rate revenues of approximately $50 million by end of this year with accretive EBITDA margins to the FoodTech segment.
Share Price Performance
Image Source: Zacks Investment Research
The stock has gained 32.6% in the past year, compared with the industry’s rally of 87.7%.
Zacks Rank & Other Stocks to Consider
John Bean currently carries a Zacks Rank #2 (Buy).
Image: Bigstock
John Bean (JBT) Bets on Robust Order Levels and Acquisitions
John Bean Technologies Corporation (JBT - Free Report) will benefit from the recent improvement in order trends in both its segments — JBT FoodTech and JBT AeroTech. The company’s strategic acquisition program focused on companies that add complementary products, and efforts to develop innovative products will drive growth as well. Focus on process optimization efforts and its cost-cutting actions will aid margins.
Improving Orders to Fuel Revenues
In second-quarter 2021, the company witnessed a 68% surge in orders to $580 million compared with the prior-year quarter. Orders in the JBT FoodTech segment climbed 51% year over year. The segment has been witnessing sequential improvement in order levels over the past four quarters. Due to the pandemic, the food industry has experienced a surge in retail demand driven by packaged food purchases and positive recovery for certain customers across the food industry, specifically those in the quick service restaurant drive-through businesses and those servicing the sustained "eat-at-home" trend. The company reported robust orders for its automated guided vehicle business. This is expected to continue in 2021, which bodes well for the FoodTech segment.
The AeroTech segment’s orders soared 123%. Passenger airline industry contributes a significant portion to the segment’s revenues. Passenger air travel has been picking up from 2020 levels, courtesy of vaccination initiatives globally and re-opening of travel routes. Airport infrastructure spending, which is subject to long lead time contracts, is expected to remain healthy for the balance of 2021. Aftermarket revenues are also gaining steam as equipment utilization increases for customers in line with air traffic demand.
Upbeat 2021 Guidance
Backed by solid results so far this year and order trends, the company now projects adjusted earnings per share between $4.60 and $4.80 for 2021, up from the prior projection of $4.40-$4.60. The mid-point of the range suggests growth of 19% from 2020. The company expects total revenue expansion of 10% to 13% for the full year.
Cost Reduction to Drive Margins
John Bean has been delivering strong EBITDA margin performance, driven by the company’s recent process optimization efforts and JBT Operating System discipline, and rapid implementation of cost-cutting actions. In third-quarter 2020, the company implemented a restructuring plan for manufacturing capacity rationalization affecting both FoodTech and AeroTech segments. These restructuring actions are expected generate incremental cost savings during 2021. John Bean’s Elevate plan is likely to drive continued growth and margin expansion. Per the plan, the company is focusing on accelerating development of innovative products and services to provide customers with solutions, which will enhance yield and productivity. These efforts will help the company counter input cost inflation that is currently plaguing the industry.
Concerted Efforts to Grow Business
John Bean intends to ramp up initiatives that were previously underway to bring automation solutions to the protein market. Liquid Foods’ end products such as juice, canned foods and ready meals continue to witness high retail demand. The protein market has a total estimated market size of $18 billion. The Liquid food market has a worth of $8 billion. The company has ample scope to grow in both markets.
The company is capitalizing on its extensive installed base to expand recurring revenues (which accounts for around 40% of its revenues) from aftermarket parts and services, equipment leases, consumables and airport services. In AeroTech, the company plans to continue developing advanced military product offerings and customer support capabilities to service global military customers.
Acquisitions Remain a Key Catalyst
John Bean has a strategic acquisition program focused on companies that add complementary products, which enable it to offer more comprehensive solutions to customers. In the last few years, the company acquired Proseal UK Limited, Prime Equipment Group and certain assets and liabilities of MARS Food Processing Solutions. Earlier this year, the company bought AutoCoding Systems to fortify its abilities in the growing global market for in-line coding and inspection solutions. Its latest acquisition of Prevenio expands recurring revenue stream and ability to address food safety needs of customers. Prevenio is expected to generate annualized run rate revenues of approximately $50 million by end of this year with accretive EBITDA margins to the FoodTech segment.
Share Price Performance
Image Source: Zacks Investment Research
The stock has gained 32.6% in the past year, compared with the industry’s rally of 87.7%.
Zacks Rank & Other Stocks to Consider
John Bean currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are Kadant Inc. (KAI - Free Report) , Deere & Company (DE - Free Report) and Mueller Industries, Inc. (MLI - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kadant has an estimated earnings growth rate of 47.9% for the ongoing year. The company’s shares have gained 72% in a year’s time.
Deere & Company has a projected earnings growth rate of 115% for fiscal 2021. Over the past year, the company’s shares have appreciated 81%.
Mueller Industries has an expected earnings growth rate of 154% for 2021. The stock has climbed 43% in the past year.