Mixed Print and Guide Cause Us to Lower John Bean Technologies’ FVE by $1

After reviewing narrow-moat-rated John Bean Technologies’ JBT latest results, we reduce our fair value estimate by $1 to $120. While there were certainly some puts and takes in its fourth-quarter print, JBT’s results were largely in line with our expectations. Revenue was nearly lineball accurate and adjusted EPS beat what we earmarked by 4%, but JBT incurred more cash charges than what we penciled in, such that GAAP EPS was about 2.5% lower than what we were hoping to see.

While results were in line, we were somewhat disappointed by JBT’s guidance, particularly in terms of management’s expectations for foodtech’s revenue and somewhat by its operating margins in full-year 2023. At a high level, we were hoping to see about 140 basis points more of revenue growth in the guide, which translated to about to a 20-cent reduction in our 2023 adjusted EPS expectations that now sits at $5.25 (or nearly $10 million less in GAAP net income).

We now value JBT at nearly 23 times this figure, or a premium of about one turn relative to the category. While our long-term revenue assumptions remain essentially unchanged after reassessing JBT’s markets and competitive positioning, we’ve moderated our midcycle operating margin by about 90 basis points, excluding restructuring (with roughly two thirds of the impact related to about $27 million in additional through-the-cycle corporate expense).

We were hoping to hear a margin guide of about 14.5% at the midpoint for the foodtech segment, but we got a full 100 basis points lower from management. That said, this headwind was entirely offset by far greater than expected aerotech margins of 11.5% at the midpoint of the guide, with aerotech clearly benefiting from operating leverage related to the commercial aerospace recovery and infrastructure spending.