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Food processing and aviation equipment manufacturer John Bean (NYSE:JBT) fell short of analysts' expectations in Q2 CY2024, with revenue down 5.9% year on year to $402.3 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $1.73 billion at the midpoint. It made a non-GAAP profit of $1.05 per share, improving from its profit of $0.97 per share in the same quarter last year.
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John Bean (JBT) Q2 CY2024 Highlights:
- Revenue: $402.3 million vs analyst estimates of $432.6 million (7% miss)
- EPS (non-GAAP): $1.05 vs analyst expectations of $1.25 (15.7% miss)
- The company dropped its revenue guidance for the full year from $1.75 billion to $1.73 billion at the midpoint, a 1% decrease
- EPS (non-GAAP) Guidance for the full year is $5.20 at the midpoint, roughly in line with what analysts were expecting
- EBITDA Guidance for the full year is $300 million at the midpoint, below analyst estimates of $302.2 million
- Gross Margin (GAAP): 35.6%, up from 34.2% in the same quarter last year
- Free Cash Flow of $10.3 million, up from $700,000 in the previous quarter
- Market Capitalization: $3.10 billion
Tracing back to its invention of the mechanical milk bottle filler in 1884, John Bean (NYSE:JBT) designs, manufactures, and sells equipment used for food processing and aviation.
General Industrial MachineryAutomation that increases efficiency and connected equipment that collects analyzable data have been trending, creating new demand for general industrial machinery companies. Those who innovate and create digitized solutions can spur sales and speed up replacement cycles, but all general industrial machinery companies are still at the whim of economic cycles. Consumer spending and interest rates, for example, can greatly impact the industrial production that drives demand for these companies’ offerings.
Sales GrowthA company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones tend to grow for years. John Bean struggled to generate demand over the last five years as its sales dropped by 3.2% annually, a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. John Bean's recent history shows its demand has stayed suppressed as its revenue has declined by 5.5% annually over the last two years.
This quarter, John Bean missed Wall Street's estimates and reported a rather uninspiring 5.9% year-on-year revenue decline, generating $402.3 million of revenue. Looking ahead, Wall Street expects sales to grow 8.2% over the next 12 months, an acceleration from this quarter.
Operating MarginJohn Bean has done a decent job managing its expenses over the last five years. The company has produced an average operating margin of 9%, higher than the broader industrials sector.
Looking at the trend in its profitability, John Bean's annual operating margin decreased by 1.7 percentage points over the last five years. Even though its margin is still high, shareholders will want to see John Bean become more profitable in the future.
In Q2, John Bean generated an operating profit margin of 6.7%, down 3.5 percentage points year on year. Conversely, the company's gross margin actually rose, so we can assume its recent inefficiencies were driven by increased operating expenses like sales, marketing, R&D, and administrative overhead.
EPSAnalyzing long-term revenue trends tells us about a company's historical growth, but the long-term change in its earnings per share (EPS) points to the profitability of that growth–for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for John Bean, its EPS and revenue declined by 2.4% and 3.2% annually over the last five years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, John Bean's low margin of safety could leave its stock price susceptible to large downswings.
Like with revenue, we also analyze EPS over a shorter period to see if we are missing a change in the business. For John Bean, its two-year annual EPS growth of 5.7% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.
In Q2, John Bean reported EPS at $1.05, up from $0.97 in the same quarter last year. Despite growing year on year, this print missed analysts' estimates. Over the next 12 months, Wall Street expects John Bean to grow its earnings. Analysts are projecting its EPS of $4.42 in the last year to climb by 24% to $5.48.
Key Takeaways from John Bean's Q2 Results We struggled to find many strong positives in these results. Its revenue and EPS unfortunately missed Wall Street's estimates and it lowered its full-year revenue guidance. Its full-year EPS and EBITDA forecast also fell short. Overall, this quarter could have been better. The stock remained flat at $96.65 immediately following the results.
