Shares of John Bean Technologies (JBT) hit a new fifty two week high on Friday. The shares rose off of a $15 million contract with Saudi Arabia airport King Abdul-Aziz International. Based out of Jeddah, Saudi Arabia, the airport selected John Bean Technologies for gate service systems, as part of its upgrade and expansion plans. More specifically, John Bean Technologies will supply the airport with jetway air handling units and pit distribution systems. The order is expected to be completed by the end of the fourth quarter of 2013. As one of the biggest airport service and food technology companies, John Bean Technologies is seeing huge growth and an impressive backlog. Here is a closer look at the company.
John Bean Technologies has been around for over 100 years, tracing its roots back to 1884. The longtime company has only been public for four years. From a May investor presentation, here are some interesting facts about the company:
· Sterilize more than 50% of the world's frozen foods
· Squeeze more than 75% of the world's citrus juices
· Load 70% of the world's overnight express packages
· Board 75% of United State passengers
· Has huge recognizable customer list including: Del Monte, Starkist, ConAgra Foods, Nestle, Tyson, Sunkist, Campbell's Soup, FedEx, DHL, Delta Airlines, United Airlines
· #1 market share in-container processing
· #1 market share freezing and chilling
· #1 market share citrus
· #2 market share poultry
· #2 market share tomatoes
As you can see, John Bean Technologies has huge market shares in foods and airports and has probably impacted the food you just ate or your travel itinerary without you even knowing.
In fiscal 2012, John Bean Technologies had revenue that was split 60% FoodTech and 40% AeroTech. Total revenue reached $917 million. Operating profits are split similar to revenue representation, with FoodTech representing 61% of profits, and AeroTech seeing 39% of profits.
Here is a breakdown of the FoodTech segment (by % of 2012 FoodTech revene):
· 34%-Freezing and cooling (poultry/meat, seafood, fruits/vegetables, baking products
· 19%-Protein processing (poultry/meat, seafood)
· 34%-Juice and fruit processing (juices, beverages, tomato paste, tomato sauce)
· 13%-In-container processing (shelf-stable products, formulated milks, beverages)
The AeroTech segment breaks down as (by % of 2012 AeroTech revenue):
· 30%-Gate equipment (passenger boarding, air and power supply)
· 37%-Ground support (container loading, cargo transporting, military aircraft loading, pushback/towing, aircraft de-icing)
· 23%-Airport services (maintaining and monitoring airport facilities and equipment)
· 10%-Automated systems (guided vehicle systems for material handling)
Split of Divisions
With revenue split pretty even between food and aerospace, John Bean Technologies could think about splitting the company into two. I'm surprised an activist hasn't taken a large stake to make this happen yet. A split of divisions would create more centralized focus on business segments.
The FoodTech division will have better operating margins going forward and would provide investors with consistent orders and revenue. The AeroTech division is seeing strong growth from a bullish sector. International airport and aerospace expansion is powering growth and would likely make the AeroTech division the growth engine as a separate company.
The company has four generic goals (4Gs)
· Grow where the world is going fastest
· Grow margins
· Grow beyond the scale
· Grow our technology advantage
The company also has specific goals going forward, which include:
· Increase food division operating margin to 12 to 13% (was 9.7% in 2012)
· Increase Aerotech operating margin to 10% (was 9.4% in 2012)
These margin increases will help drive earnings per share by 2015, with that being the targeted date set by the company.
The Saudi Arabia airport deal adds to an already impressive backlog. Here is a look at other recent publicly announced deals:
· June 11: $8 million order from Ohio State University. Will provide automatic guiding vehicles.
· June 18: $4 million contract for the company's food division. Will be completed by the first quarter of 2014.
· June 28: Signed a three year contract with the Salt Lake City International Airport. Contract includes two year renewal option. Total contract would pay $4 million for five years. John Bean will provide maintenance services and support for baggage handling.
At the end of the first quarter, John Bean Technologies saw its backlog increase 18% to $330 million. The backlog was powered by FoodTech backlog, which hit a record $200 million. Surprisingly, the backlog numbers include the loss of two US Air Force contracts, which represented a large portion. With those contracts, backlog would have been up 26%.
First Quarter Earnings
In the first quarter of 2013, John Bean Technologies reported a 9% decline in revenue. Earnings per share came in flat at $0.14. FoodTech revenue of $104.8 million was a decline of 10%. AeroTech revenue of $77.9 million was a decline of 9%. However, the company still expects high single digit revenue growth on the year, due to a back half loaded backlog and service schedule.
Shares of John Bean Technologies hit an all-time high last Friday. That should come as no surprise to anyone who has followed the company and its impressive backlog. Over the last fifty two weeks, shares of John Bean have traded between $13.58 and $24.83.
In fiscal 2013, analysts are predicting earnings per share of $1.46. Revenue is expected to come in six percent higher at $972.5 million. In fiscal 2014, analysts see the company posting earnings per share of $1.66. Revenue is expected to increase 3.4% and hit the milestone $1.0 billion amount. If John Bean Technologies can deliver on its high single digit growth and increase its backlog, shares are poised for further breakouts. I expect the company to beat revenue with closer to 8-9% growth. I also expect earnings per share to come in above range, due to a further focus on improving operating margins by 2015.