Why Is JBT (JBT) Down 44.2% Since Last Earnings Report?

It has been about a month since the last earnings report for John Bean (JBT). Shares have lost about 44.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is JBT due for a breakout? 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 Technologies Q4 Earnings & Sales Top Estimates

John Bean Technologies reported adjusted earnings of $1.50 per share in fourth-quarter 2019, surpassing the Zacks Consensus Estimate of $1.39. The bottom-line figure, however, declined 10.2% from prior-year quarter figure of $1.67.

On a reported basis, the company’s earnings per share came in at $1.31 compared with the prior-year quarter’s $1.34.

The company’s revenues of $545.5 million in the reported quarter outpaced the Zacks Consensus Estimate of $530 million. Also, the top line improved 1% year over year. Acquisition growth of 9% helped offset a drop of 2% in organic sales, an unfavorable impact of foreign exchange of 1% and a 5% decline thanks to the absence of the ASC 606 transition benefit recorded in fourth-quarter 2018.

Orders in the JBT FoodTech segment increased 7.6%, year on year, to $372.1 million in the reported quarter. Orders in the JBT AeroTech segment summed $112.2 million, reflecting a year-over-year drop of 13.8%.

Backlog in the FoodTech segment edged down 1% year over year to $401.3 million. The AeroTech segment’s backlog came in at $304.6 million in the reported quarter, flat compared with the prior year quarter.

Cost and Margins

Cost of sales slid 0.3% year over year to $377.6 million in the fourth quarter. Gross profit improved 5.9% year over year to $167.9 million. Gross margin came in at 30.8% compared with the year-earlier quarter’s 29.5%.

Selling, general and administrative expenses flared up 21% year over year to $103.3 million. Adjusted operating profit fell 6.7% year over year to $69 million. Adjusted operating margin was 12.6% compared with prior-year quarter’s 13.7%.

In the reported quarter, adjusted EBITDA came in at $87.2 million, down 1.7% year over year. In the December-end quarter, AeroTech's margins expanded year over year, while margins at FoodTech declined primarily due to higher incentive compensation expense.

Segment Performance

JBT FoodTech: Net sales were down 1.8% year over year to $357.2 million. Adjusted operating profit declined 10.2% from the prior-year quarter to $53 million.

JBT AeroTech: Net sales improved 8.4% year over year to $188 million. The segment reported adjusted operating profit of $28.7 million, up 18% year over year.

Financial Performance

John Bean Technologies reported cash and cash equivalents of $39.5 million in 2019, down from the year-earlier figure of $43 million. The company generated $110.6 million of cash from operating activities during the 12-month period ended Dec 31, 2019 compared with the $154.6 million reported in the prior-year period. At the end of 2019, long-term debt was $698 million, up from $387 million as of Dec 31, 2018.

2019 Results

John Bean Technologies reported adjusted earnings per share of $4.96 in 2019, up 13% from the prior year’s $4.39. Earnings beat the Zacks Consensus Estimate of $4.86. On a reported basis, earnings per share came in at $4.03 compared with the $3.24 recorded in 2018.

Sales came in at $1.95 billion in 2019 compared with the previous year’s $1.92 billion. The top-line figure also beat the Zacks Consensus Estimate of $1.93 billion.

Guidance

John Bean Technologies anticipates revenue growth of 3-4% for the current year. It includes organic growth of 1% and acquisitions growth of 3%, with a foreign currency headwind of 0-1%. For the ongoing year, net income is projected at $159-$166 million. Adjusted EBITDA is expected between $315 million and $325 million. Adjusted EPS is expected between $5.15 and $5.35.

For the ongoing quarter, the company anticipates revenues between $440 million and $445 million and adjusted EPS is expected in the range of 75 cents to 80 cents.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -6.35% 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 an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

JBT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.