Like many larger conglomerates, John Bean Technologies (NYSE: JBT) has done a good job of serving the needs of two very different industries. Domestic and international air transportation companies use John Bean Technologies equipment to move aircraft and get supplies around airports as quickly and efficiently as possible. The food and beverage industry relies on the company for automated systems as well as arranging for high-value items like proteins and liquid foods. In past years, the strength of those two areas has lifted JBT higher, and recent acquisitions have helped the company gain even more positive momentum.
Continue Reading Below
Coming into Monday's third-quarter financial report, JBT investors fully anticipated double-digit percentage growth in the top and bottom lines. What they got was even stronger performance than they were looking to get, and the company improved its outlook for the full year as well. Let's look more closely at JBT to see what's ahead for the small conglomerate.
JBT flies higher
John Bean Technologies' third-quarter results gave investors most of what they had hoped to see. Revenue jumped 20% to $421 million, outpacing the slightly slower growth rate that most of those following the stock had expected from the food and airport services provider. Net income climbed by a quarter to $25.8 million, and that worked out to earnings of $0.80 per share, topping the consensus forecast among shareholders for $0.78 per share.
Fundamentally speaking, JBT once again saw the biggest part of its growth come from the businesses it has acquired recently. Out of the 20% growth rate on the top line, 15 percentage points came from acquisitions, compared with just 5% organic growth.
JBT nevertheless got more efficient. Gross margin jumped two percentage points, reflecting efforts to keep key supply costs down. Operating margin also improved markedly, jumping by nearly a fifth to 10% and showing the success that the company has had in keeping overhead expenses under control while clamping down even harder on other ancillary costs.
Continue Reading Below
Looking more closely at JBT's segments, the FoodTech unit once again enjoyed faster growth than its AeroTech peer. Segment operating profit at FoodTech was up by more than a third, taking full advantage of a 25% rise in the division's sales. The AeroTech division managed profit growth of just under 30% on more modest revenue gains of almost 11%. However, when it comes to inbound orders, AeroTech took the lead with growth of almost two-fifths, compared to a more modest rise of 22% for FoodTech orders. Order backlogs were up for both segments, rising to more than $708 million across the business.
John Bean CEO Tom Giacomini kept things simple with his description of the period. "Our third-quarter performance was characterized by double-digit revenue and earnings gains, margin expansion, and continued order strength," Giacomini said, and "market conditions remained robust across FoodTech and AeroTech." The CEO also noted that solid execution contributed to positive performance for the company.
What will make JBT even more attractive?
JBT continues to be enthusiastic about what's coming down the road. CFO Brian Deck noted that "JBT's strong third quarter performance reinforces our confidence in the full-year guidance." Indeed, the company boosted the lower end of its full-year earnings projections, now expecting between $3 and $3.10 per share on its bottom line.
The company has also taken steps to make its management team stronger. In August, the company created two new leadership positions that will now report directly to the CEO. To line up with JBT's emphasis on the FoodTech side of its business, Giacomini named two executive vice president positions, one to lead the protein sub-group and one to focus on liquid foods. In the CEO's words, the move "best promotes growth and advances our operational improvement programs by increasing our executive leadership capacity."
JBT investors didn't have a huge reaction to the news, but the stock did climb slightly in after-hours trading following the announcement. If the company can keep generating new opportunities both through strategic moves and by improving its existing business, then JBT investors should be able to participate in the conglomerate's success in the years to come.
10 stocks we like better than John Bean Technologies
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and John Bean Technologies wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of October 9, 2017