On August 1, after the market closes, John Bean Technologies (NYSE:JBT) is scheduled to release its second-quarter 2023 results. Investors are eagerly awaiting the performance of the FoodTech segment as JBT transitions into a pure-play provider of food and beverage solutions with the sale of its AeroTech segment. The FoodTech segment is expected to have benefitted from improved order levels, supply chain improvements, and sustained momentum in recurring revenues.

Factors Expected to Boost FoodTech’s Q2 Results

Improvement in Orders: The FoodTech segment saw a decline of 1.4% in order levels in Q1 2023 due to subdued customer spending amid inflationary pressures. However, this marked an improvement from the declines in the previous quarters. The segment has been witnessing high customer interest in products and solutions that enhance automation, efficiency, and sustainability, leading to an estimated 7% year-over-year growth in Q2 orders.

Benefits from Easing Supply Chain Issues: Supply chain disruptions, including shortages of critical raw materials and labor, affected JBT’s production and deliveries in 2022 and Q1 2023. The situation has improved in Q2 2023, leading to better deliveries and reduced backlog levels for the FoodTech segment. The backlog is projected to be $672.8 million at the end of Q2, compared to $678.3 million in Q1 2023.

Gains from Higher Mix of Recurring Revenues: The FoodTech segment reported strong sales growth of 9% in Q1 2023, with organic growth of 2% and acquisitions contributing 10%. The segment’s performance was boosted by a higher mix of recurring revenues, including aftermarket parts and services, and lease and long-term service contracts, which generate higher margins. Recurring revenues accounted for 56% of total revenues in Q1 2023.

Based on these factors, the estimated revenues for the FoodTech segment in Q2 stood at $429.1 million, reflecting an 8.9% year-over-year growth, with organic growth estimated at 4.9%. The acquisitions of Bevcorp and Alco-food-machines GmbH & Co. KG are expected to contribute to the segment’s top line in the quarter.

Overall Q2 Expectations for JBT

For the entire company, the Consensus Estimate for total revenues in Q2 2023 is $587.4 million, indicating a year-over-year growth of 8.3%. Improved performances in both segments are likely driving this growth.

However, the consensus estimate for earnings stands at $1.12 per share, indicating a 0.9% decline compared to the prior-year quarter. JBT has faced challenges from material inflation and higher labor costs, albeit at a lower level. Additionally, higher interest expenses may have impacted earnings.

JBT’s bottom line has beaten estimates in three of the last four quarters, with an average trailing four-quarter earnings surprise of 8.5%.

Investors will be closely monitoring the Q2 earnings report to assess the performance of the FoodTech segment and JBT’s overall financial health.

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