A month has gone by since the last earnings report for John Bean (JBT). Shares have added about 2.6% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
John Bean Q4 Earnings Beat Estimates, Increase Y/Y
John Bean reported adjusted earnings of $1.40 per share in fourth-quarter 2023, which were 24% higher than the year-ago quarter, aided by a strong operational performance and the solid execution of its supply-chain initiatives. The figure beat the Zacks Consensus Estimate of earnings of $1.39.
On a reported basis, the company’s earnings per share (from continuing operations) were $1.64, a 69% improvement from the year-ago quarter’s 97 cents.
Revenues of $445 million increased 1% from the year-ago quarter. The top-line figure beat the Zacks Consensus Estimate of $443 million.
The cost of sales decreased 4.6% year over year to $284 million in the fourth quarter. Gross profit was up 12% year over year to $161 million. The gross margin was 36.2% compared with the year-earlier quarter’s figure of 32.6%.
Selling, general and administrative expenses were up 6% year over year to $104 million. Adjusted operating profit increased 25% year over year to $56.8 million from the year-ago quarter’s $45.3 million. Adjusted operating margin was 12.8% compared with 10.3% in the fourth quarter of 2022.
In the quarter under review, adjusted EBITDA was around $81 million, reflecting a year-over-year increase of 18%. Adjusted EBITDA margin was 18.2% compared with the year-ago quarter’s 15.6%.
Cash Position and Balance Sheet
John Bean reported cash and cash equivalents of $483 million at the end of 2023, a significant increase from $72 million at the end of 2022. The company generated around $74 million in cash from operating activities in 2023 compared with $135 million in the prior year. Free cash flow was $167 million, representing a free cash flow conversion of 129%.
The company’s total debt was $646 million as of Dec 31, 2023, down from $978 million as of Dec 31, 2022.
2023 Performance
JBT reported adjusted earnings per share of $4.10 per share, which were 12% higher than the 2022 figure of $3.67. The bottom line beat the Zacks Consensus Estimate of earnings of $4.07 per share. Including one-time items, earnings per share were $4.02 in 2023 compared with $3.23 in 2022.
Revenues rose 4.7% year over year to $1.66 billion, in-line with the consensus estimate. The improvement was mainly driven by acquisitions.
In 2023, the company’s orders increased 5% year over year to $1.67 billion. The figure came in line with our projection of orders of $1.67 billion.
The backlog was $678 million at the end of 2023, up from $664 million at the end of 2022. Our projection for the backlog was $662 million.
Guidance for 2024
The company expects revenues between $1.75 billion and $1.78 billion for 2024. The midpoint of the range indicates year-over-year growth of 6%. JBT expects mid-single-digit organic top-line growth primarily through recurring revenue initiatives and improving demand for equipment, which includes improvement in the North American poultry market in the second half of 2024.
Income from continuing operations is likely to be between $150 million and $162 million. Adjusted EBITDA is forecasted at $295 - $310 million, indicating year-over-year growth of 11% at the midpoint. EBITDA margin is expected between 17% and 17.5%. JBT had reported adjusted EBITDA margin of 16.4%.
John Bean expects adjusted earnings per share between $5.05 and $5.45 per share in 2024. The midpoint of the range suggests 28% year-over-year growth. Margin improvement will be driven by the advancement of supply chain and manufacturing efficiency initiatives as well as ongoing benefits from JBT’s restructuring efforts.
Update on JBT’s Offer for Marel
On Jan 19, 2024 JBT announced that it made an updated offer to acquire each of the outstanding common stock of Marel hf. (Marel) at €3.60 per share. Initially, in November 2023, John Bean had made the offer at €3.15 per share, which it subsequently increased to €3.40 per share in December.
Headquartered in Iceland, Marel is an international food processing company. It manufactures equipment and provides other services to poultry, meat and fish industries.
The proposed merger will unite two renowned companies with complementary product portfolios, well-known brands, and advanced technology. The combined company, which is expected to be named JBT Marel Corporation, is poised to become a leading and diversified global food and beverage technology solutions provider.
Anticipated benefits of the merger include significant cost synergies exceeding $125 million within three years following the completion of the transaction across areas such as procurement, manufacturing and G&A. JBT Marel is also expected to benefit from additional revenue synergies, given attractive cross-selling, go-to-market effectiveness, scaled innovation and enhanced global customer care capabilities.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, JBT has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
JBT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
JBT is part of the Zacks Manufacturing - Thermal Products industry. Over the past month, Zebra Technologies (ZBRA), a stock from the same industry, has gained 4.2%. The company reported its results for the quarter ended December 2023 more than a month ago.
Zebra reported revenues of $1.01 billion in the last reported quarter, representing a year-over-year change of -32.9%. EPS of $1.71 for the same period compares with $4.75 a year ago.
Zebra is expected to post earnings of $2.47 per share for the current quarter, representing a year-over-year change of -37.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -11.6%.
Zebra has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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