What Do John Bean Technologies’ Newly Added Risk Factors Reveal?

Chicago-headquartered John Bean Technologies (JBT) provides technology solutions to the food processing and air transport industries.

Let’s take a look at the company’s latest financial performance, corporate developments, and risk factors.

John Bean Technologies’ Q2 Financial Results and 2021 Guidance

Revenue increased 16% year-over-year to $475.5 million in the second quarter of 2021 and exceeded the consensus estimate of $452.96 million. The majority of the company’s revenue comes from the FoodTech division, where sales rose 19% year-over-year to $360.7 million. Additionally, AeroTech revenue jumped 6% year-over-year to $114.8 million.

Adjusted EPS of $1.19 rose from $1.09 in the same quarter last year and beat the consensus estimate of $1.00.  JBT ended Q2 with $202.3 million in cash. (See John Bean Technologies stock charts on TipRanks).

For Q3, the company anticipates revenue in the range of $485 million – $505 million. It expects adjusted EPS for the quarter to be in the band of $1.10 – $1.20. The consensus estimate calls for EPS of $1.19.

For full-year 2021, JBT anticipates revenue to grow in the range of 10% – 13%, with the FoodTech unit’s sales growing at least 14%. The company noted that the full-year outlook is subject to a number of risks, including a slower than expected economic recovery due to new COVID-19 variants.

John Bean Technologies’ Corporate Developments

In July, JBT completed the acquisition of food safety solutions provider Prevenio. It said that Prevenio, which primarily serves the poultry industry, expands its recurring revenue stream. Prevenio’s annualized run-rate revenue in 2021 is estimated at $50 million.

During Q2, JBT raised $356 million through a convertible note offering. The company said that the offering provides it with additional flexibility to make organic investments and execute acquisitions.

John Bean Technologies’ Risk Factors

The new TipRanks Risk Factors tool reveals 51 risk factors for John Bean Technologies. Since Q4 2020, the company has updated its risk profile with five additional risk factors.

The company tells investors that the convertible notes may dilute the ownership of existing shareholders when converted. It goes on to say that the public market sale of the shares from the converted notes could adversely impact the prevailing market price of the shares. Furthermore, the company cautions that the existence of the convertible notes could encourage shorting of its stock.

JBT warns that servicing its debts could cause liquidity problems. It says that if its operations are unable to generate sufficient cash flow to meet its debt service obligations, it may be forced to reduce capital investments or sell some of its assets. But it says there is no guarantee that such remedial efforts would be successful, and hence, it could default on its debt obligations.

JBT tells investors that the results of its operations may be adversely affected by labor shortages or an increase in labor costs. It states that labor challenges have increased because of the COVID-19 pandemic.

The majority of JBT’s risk factors fall under the Finance and Corporate category, with 35% of the total risks. That is below the sector average of 39%. JBT shares have gained about 30% since the beginning of 2021.

Analysts’ Take

Following John Bean Technologies’ Q2 report, Robert W. Baird analyst Mircea Dobre reiterated a Buy rating on JBT stock and raised the price target to $162 from $151. Dobre’s new price target suggests 9.39% upside potential.

Citing a potential boost from accretive acquisitions, the analyst has identified JBT as one of his top ideas for the second half of 2021.

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