JBT Feature Photo

John Bean Technologies posts strong quarter but stock dives

By Charlene Zhang
Medill Reports

John Bean Technologies Corp. (NYSE: JBT), a Chicago-based technology solutions provider to food and air transportation industries, topped Wall Street’s earnings estimate but, surprisingly, its high-flying stock plummeted more than 8 percent.

Net income in the fourth quarter ended Dec. 31 decreased to $19.4 million, or 60 cents per diluted share, from $23.1 million, or 77 cents per diluted share, in the year-earlier quarter, but that was caused by a one-time charge of $15.5 million resulting from the 2017 tax law. Adjusted per-share earnings were $1.10 compared with Wall Street’s estimate of $1.08.

Revenue climbed 19 percent to $483.7 million from $405 million.

Even after its decline, the stock is priced at 41 times trailing 12-months earnings, well above the S&P 500 P/E of 25.

Acquisitions comprised 11 percent of JBT’s 19 percent annual revenue growth, compared with 6 percent organic growth. “Acquisitions remain a key element of our growth strategy,” said CEO Thomas Giacomini in the conference call.

Larry De Maria, analyst at William Blair & Co., said in an email, “JBT has employed a successful M&A strategy to consolidate the food processing equipment industry for the past few years.” In 2017 JBT completed acquisitions of cutting solutions provider Viewer, food and beverage filling system supplier Plf International, and military aviation equipment manufacturer Aircraft Maintenance Support Services.

“The track record has been excellent and we see around $0.50 in EPS accretion in 2018 over 2017 already based on deals they have completed,” De Maria stated.

A priority of JBT’s three-year Elevate strategy to deliver revenue growth and margin expansion is building its Asia Pacific business.

“Asia is a growth market for JBT due to the increase in protein consumption and the demands of the growing middle class,” De Maria said. “JBT has opened a tech center to show existing and new customers its products and services in order to further expand into the market with its solutions.”

JBT’s most recent acquisition, of Schroder, a German company, in January, is intended to solidify the marinating and injection portion of the protein value chain, an area of significant opportunities for Schröder in Asia, according to Giacomini.

To continue boosting earnings as well as revenue, JBT stated it will increase R&D by as much as $4 million to achieve operating inefficiencies while striving for a projected 8 percent organic revenue growth in 2018.

In the 12 months ended Dec. 31, JBT had net income of $80.5 million, or $2.53 per diluted share, compared with $67.6 million, or $2.27 per diluted share, in the prior year. Revenues increased to $1.64 billion, up 21 percent from $1.35 billion in 2016.

The stock closed Tuesday at $111.70, down $10.60.

Photo at top: Outside the corporate office of John Bean Technologies in Chicago. Feb. 27, 2018. (Charlene Zhang/MEDILL)