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Acquisitions Fed John Bean Technologies' Strong Second-Quarter Showing

By Matthew DiLallo – Jul 27, 2016 at 10:00AM

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The purveyor of technology solutions to the food and beverage industry -- as well as air transport customers -- is also raising its full-year guidance.

Image source: Getty Images.

A steady diet of acquisitions over the past year is paying off for John Bean Technologies (JBT 3.49%). Those transactions provided more than half of the company's revenue growth during the quarter, as well as giving a substantial boost to its bottom line. That acquisition-driven boost, when combined with its already robust organic growth, resulted in better-than-expected performance, which is now leading the company to raise its full-year guidance. 

John Bean Technologies results: The raw numbers

Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

Sales

$328.8 million

$254.6 million

29.1%

Adjusted net income

$20.1 million

$14.4 million

39.6%

Adjusted EPS

$0.67

$0.48

39.6%

YOY = year over year. Data source: John Bean Technologies.

What happened with John Bean Technologies this quarter? 

Both of its segments contributed to the strong showing:

  • John Bean's FoodTech segment was the key driver of revenue growth, with its revenue up 39.6% year over year to $228.8 million thanks to robust protein equipment sales. Those sales drove equally hardy growth in that segment's operating profit, which was up 37.8% to $31 million.
  • The company's AeroTech segment was solid, with revenue rising 10.7% to $100.5 million thanks to strong military sales and a favorable product mix. Those two factors drove even higher operating profit growth, which was up 37.3% to $11.4 million.
  • Overall, margins expanded by 80 basis points, pushing the company's segment operating profit margin to 12.9%, providing the additional boost to the bottom line.

What management had to say 

CEO Tom Giacomini commented on the company's quarter by saying, "JBT continued to capture the benefits of our Next Level strategy and investments, translating to robust sales growth and improved profitability." One part of the company's three-prong Next Level strategy is to grow via needle-moving acquisitions. As its second-quarter results testify, the company is doing just that.

That should come as no surprise. For example, when the company acquired Stork Food & Dairy Systems last July, it fully expected it to deliver a $0.05-per-share boost to the bottom line this year. Meanwhile, October's purchase of A&B Process Systems was expected to not only add $100 million to the top line but boost profitability by $0.10 to $0.15 per share in 2016. Clearly, its new additions are fitting in quite well and performing as expected.

Looking forward 

Thanks to John Bean's strong performance through the first half of the year, the company is raising its full-year guidance. It now expects adjusted earnings to be in the range of $2.25 to $2.35 per share, which is up from its prior guidance of $2.15 to $2.30 per share and well above the $1.88 per share it earned last year. Furthermore, the company expects revenue to grow by 16%, with acquisitions accounting for 10% of that rate.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends John Bean Technologies. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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