John Bean Technologies (JBT) 27 Oct 222022 Q3 Earnings call transcript

Good morning, and welcome to the JBT Corporation's Third Quarter 2022 Earnings Conference Call. My name is Colby, and I'll be your conference operator today.

As a reminder, today's call is being recorded. [Operator Instructions] After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions]

the and to to Investor conference. turn of Vice begin now Development Corporate Relations, will call JBT's over President today's I Kedric Meredith,

you, Financial call is to Chief Executive and conference Thank Deck; With Meister. our morning, and Brian quarter Chief call. the third Matt XXXX welcome on me Officer, Good Colby. Officer, our everyone,

comparable JBT's also yesterday's statements the are today measure in found section safe to information Investor today's In includes available press of can A and Relations factors have are release Relations that certain the that call, filings documents discussion section we to our an most will subject our measures. periodic non-GAAP X-K Also measures risk GAAP in references regarding these Investor reconciliation be impact filing. language our our the contain website. results. use in of SEC forward-looking may harbor of website. the These on to

the Brian. I call Now, over turn to will

everyone. Thanks, Kedric, and good morning,

In posting the had points, impact of high guidance its at few a growth achieved including bottom of JBT line adjusted even for without and EBITDA FoodTech the third record XXXX, quarter in acquisitions and on attractive FX, despite year's considerable cost to recovery. competitive with path two its this We realization. AeroTech completed acquisitions progress FoodTech's and enhanced well that price position is

has environment, However, by a we in continue been further pressed which operate and challenging dynamic forces. to macroeconomic

in with to some and demand, experienced the energy FoodTech same quarter, delaying in Regarding And grapple input that high decisions. third costs of America. Europe, continue customers the pressure investment our and impacting profitability in North we

objectives. engagement ongoing well and provide as improving and focus and critical the sustainability customer support as opportunities pipeline said, strong technology customers' remain solutions advancing and uptime, our on yield automation for as core That quite our

help rapidly they customers' and it's our crucial input time Moreover, when rising constraints. a margins tackle most at enhance costs solutions as labor

at position we're macro-driven cautious current about the optimistic face our FoodTech. remain in of we uncertainty, Although

Given along believe with resilient food and materialize. downturn, weather associated demand model, the I are that more we situated economic beverage proven to our should revenue broader with well stable market recurring a

our Meanwhile, the quarter, modest discretionary tightening reduce Europe structure. cost overhead but actively spend we we are are we in took to charge globally. our managing third restructuring a In

Additionally, more necessary. we actions, are at further a demand on considerations recovery. we including as path identifying remain Separately, structural full AeroTech, toward

With over to includes I Matt provide the that, changes through and quarter you acquired our now business. guidance, to turn call the on Bevcorp details walk to which full-year will third the the

Brian. Thanks,

revenue in XXXX. year-over-year third growth in acquisitions, pullback XX% JBT a X% comprised products from by growth and below of a posted double-digit primarily slightly At fell quarter due year-over-year, Organic the of to of guidance impact exchange cycle organic in of offset X%. foreign revenue FoodTech, Europe. increased shorter XX% negative XX% growth

the same FoodTech adjusted margins time, EBITDA At delivered of XX.X%.

included encouraged of FoodTech we've million better progress basis the the million foreign which made as a points sequentially to in We margins orders by are price XXX and negative decreased X% XX from by basis points due $XX impact realization. $XXX year-over-year of year-over-year, exchange. primarily demonstrated improvement

materialized continued saw rates we equipment. with softness for beginning investment third quarter, the And decisions mentioned, European demand Brian North input slower high As as costs. customers in dealt in America delayed our in conversion customers as

the timing shipments. sequentially. XX margins basis Adjusted which of XX%, of improved mobile guidance equipment X.X% EBITDA increased primarily revenue exceeded AeroTech our to due points

and well expect progression our short ongoing We fell quarter. margins to supply continue inflation, cost margin do the chain constraints. of labor fourth for AeroTech as However, input due to guidance in as

fourth expect projects, timing demand however, some projects for quarter. for equipment we strong declined expected large due AeroTech of orders the year-over-year and remain orders mobile the in other and were $XXX million pipeline and the as to infrastructure solid

than increased costs Bevcorp. M&A primarily were in quarter the LIFO the to increase expense for debt due associated was LIFO to about digital material. Corporate acquisition of the higher higher with balance inflation Interest a as strategy. due and with associated expense year-over-year our million expected, costs expected including $X persistent excluding on of

inventory that, With FX adjusted $XX result with elevated Year-to-date, was customer share $X.XX CapEx flow earnings lower operating of flow and Cash was flow tax parts impacted in with per includes was vendors. $X.XX investment as share. deposits million, our by digital $X.XX. below to GAAP negatively posted $XX versus $X.XX we prior $X.XX million, the benefit $XX year ongoing per was our added a in while compared discrete of and share strategy. $X.XX EPS a our million cash issues levels per due EPS free which cash The expectation while availability

chain our levels customers the supply expect to normalizes, our delivering reduce backlog remains priority. we and As on supporting we inventory and are

full the conversion anticipate For year, cash we XX%. now free of about flow

due leverage range by target the of of was and profitability lower net currently and combination just our net will Xx ratio We ratio that the approximately above of be end improved year of quarter, the Bevcorp a As X.Xx, to our to anticipate Alco. debt. leverage the acquisitions third our due

As the negative third from U.S. the and through expect year. continue results I of that mentioned end dollar strong the our weighed higher-than-expected quarter FX heavily to impact the earlier, we on

impact EPS. to the on this million on of For a negative $XX full million $XX revenue, $X.XX approximately equates and EBITDA, year, on

an regards offset Bevcorp, growth FoodTech Now breaks of exchange XX% that which includes from organic to XX.XX%, X% growth, the we to year-over-year XX% to quarter, foreign with fourth down revenue to X% for expect to acquisitions, XX% by impact. guidance, XX%

growth The margin EBITDA operating XX% of to XX.XX% XX.X% margins margins, expect of to For to AeroTech, XX.X%, FoodTech XX.X%. XX.XX%. expect adjusted of we we revenue

EBITDA XX.XX% profit anticipate we operating AeroTech, For of XX.XX%. XX% and adjusted XX% margin to to margin of

is full-year $X.XX our to estimates, $X.XX $X.XX of EPS and Considering quarter -- provided full-year provided adjusted and $X.XX to earnings We $X.XX. fourth revised narrowed our an were in which Our GAAP GAAP we yesterday's results adjusted now and of have release of $X.XX fourth which ranges, EPS press $X.XX, to $X.XX. guidance EPS and estimate quarter to guidance third EPS quarter have presentation.

call back let to me turn Now, Brian. the

Thanks, Matt.

FoodTech's are pleased We we margin pre-pandemic approach as levels. progression in particularly quarter the with

Although are to critical supply price-cost in for we have long, times efforts the the overall constraints our lead still continue components this regard, and starting on ease deliveries side, chain do pricing to more work close and while gap. are to

context in margin one level on quarter orders does normal These cautiousness not it drove good broader macroeconomic headwinds, in circumstances, our FoodTech better for gains growth said, Under of dynamics the outlook. do along raise but volatility, That third quarter. revenue third any much with softened quarter. the weight the we FoodTech's too regarding place the of in XXXX

our should XXXX We full we turn the FoodTech XXXX of standard the The We corner to quarter expect dynamics. then year. year price-cost billion are on better practice. provide with AeroTech. with In backlog here few earnings meantime, the next how we things embeds thoughts call and into our for be a backlog across fourth look as guidance $X at entering almost

invest. customers Our -- and FoodTech with order constrained record to remains need our fundamental near margin a equipment levels to continue order capacity be pipeline as

downturns, total Recurring and revenue, revenue flat has for FoodTech year-over-year in half nearly which steady was recurring held the FoodTech of in about organically. as XXXX, represents a reminder, historically

defense the infrastructure high AeroTech, We single-digits. time, industry in At markets in the mobile In to deliver support products. and recovery ground dynamics in cargo robust for for improving to expect foresee demand XXXX, is top the continued and equipment. growth in commercial we translating line the airline same health our growth strong

backlog is and debt needs. primary continue our focus the management, reduction quarter, our For support fourth customers' we while the on cost deliver our and to

Let me customers' thoughts is put journey. sustainability JBT on enhancing some how our

As seen partnering you their support include with leadership solutions help their customer dedicated support in advance goals, and development recent expanded the focused a of our on may function, environmental footprint. that release, reduce sustainability have and to products the we news to

automated Through other technologies, we and and reduce cleansing water help systems, conserve water waste. customers reuse systems

Our recyclable improving reduce environmentally-friendly biodegradable yield the packaging materials. waste reduce life. or of promote food food plastic solutions We extending of use use and by shelf the the and

and of performance monitor use and resources customers' real our manage yield enhancing ability in are freezing OmniBlu our improve energy to digital precious motors, recovery health usage. and product the systems across refrigeration technologies. with we We and portfolio reducing energy-saving designs, time, low-emission heat lower with to energy water committed machine power-consuming tools, the And and

we our September On the announced of which X, Bevcorp, front, provides customers. beverage blending, completed for on M&A previously systems the acquisition and closing filling

inflationary this out it recurring and for Bevcorp water, of drinks, the expanding resilient gate that As serves seltzers is discussed, alcohol -- well out of fared of and categories has more sparkling blends, comes it Bevcorp's the revenue soft have than end market beverages gate to XX% accretive is in and and strong. and come the margins environment.

defined JBT's of front AeroTech, strategy communicate we path regarding the expect terms half XXXX. to of In during still portfolio a

the As economic I creates uncertainties. said top at environment current the the of call,

However, as with sales we resilient industries, revenue and organization. global sensitive the beverage of in combined high us believe food position for level makes the JBT's a less leader a recurring economically

like JBT's serving foundation teams, global of is and I'd thank always, our to customers our dedication As to whose commitment growth the success. and

open questions. let's the that, Operator? call With for

from Baird. comes Dobre Mig Your Instructions] [Operator from line of the question first

line is Your open.

Okay. me guys. Can Good morning okay? you hear

Mig. Yes. Good morning,

to wanted a question. flow free with start I Excellent. cash

chain lot year. had this obviously with a You deal of issues supply a to

expect XXXX? to this getting of north conversion like we into XXX% net think next are Sounds to about things Is fair income better. capital do year? folks it How converting for working of cash

Yeah.

I is think this -- Mig, Matt.

I for is perspective flow digital some a on because that even fair assumption increased a think honestly, XXXX. just from quite cash CapEx down of investment I conversion our mean, is our of percentage XXXX, in our strategy.

we're to XXX% to XXXX, going able think back our we pretty confident forward. I income be plus in normal So net will that convert

I talk starting a months? kind right, term? as little interest next to about robust are it the bit XX as M&A backseat well. far Should Can near reduction to pressure mean, deleveraging we XX sort a and going to is call as you macro view take expect and complicated, how up rates that's And debt in you more of more the your goes, clearly see of here EPS the

sure or and I'm Xx comments is in I to fixed then ratio we're Xx be our a has as flow outstanding reminder, think that term, a getting Brian and think leverage pretty I relatively our mean, back well. our which Xx, below pretty start range. is I the will improved some to in And majority short here, current I'll short focused at And we confident mean, target Mig, order, just the profitability. cash a I feel I the debt as Yes. rate. on through just at of that

in spot debt we're good a from a So perspective. pretty

Right.

operationally. speaking, going and Alco to we our Bevcorp we the -- that broadly then both financially We're we just and are time And acquisitions. completed take more certainly, that pleased very to absorb

still a is M&A know, core to you from as our perspective. However, strategy growth

As our to back be, we'll leverage where active. we be it needs get

We always-on active continue to be an in process. marketplace it's because the

these longer As it a year for you know, or to sometimes gestate. to opportunities takes --

but we'll we keep any the we're environment, opportunity. target active to is broader cognizant that, So certainly, be our on going think going for of growth leverage and where macroeconomic very

term, So here see reduction. in net short on focused us you're debt the going I think to

I your on I think been FoodTech Then, earnings far different Okay. companies. question guess me from broader hearing look the on orders for the I've other is bit speaking, what maybe impacting a as final commentary demand and little is as macro calls one than candidly

lingers seeing this kind from could American near-term talking are customers, is North not hesitancy investment actually XXXX cycle your get outside You that or about and impact your again? more of think about curious you. American that is into you Europe, you Europe the I'm I'm of your something perspective, to a so this sort what customers, And them? a do Thank North And of are specifically. cautious and

do pipeline and we've or seen I'll has maybe pause two shocks And of final for saw say on Not certainly I take I just as a see strong. call big, -- as decision literally will the a in and when We our orders it, past customers get even to or often Sure. surprisingly opportunities been try quarter economic whatnot. is there this mentioned, impacts. and signatures very we this, but they that our making delays

and our The support are opportunities we products for invest, to services and conversations them. telling that to want customers growth that have us and they invest, that the with they need

Pack was here busy and it I was Expo in just at the this show. Chicago show In a very week, fact,

Our booths booth All busy. was were the around busy.

customers, reiterating said. with So -- and had I conversations I just what

about getting it to That worse macroeconomically, trying said, to here. thinking we're from obtuse we're to be things for continue XXXX, be we months. for feel broader next just expenses in But specific and guidance you, secularly some early we and concerns positioning will economic to in that that going cyclically, of the Mig, to in our not case us light, it's give are can I have on tell while of well-positioned externally couple too

We for are growth capitulating on XXXX. not

it. appreciate I Okay.

Thank you.

comes [Operator line Instructions] Blair. of William the Your next Lawrence from from question Maria De

open. is line Your

Good morning, everybody. Thanks. A of couple questions.

digital engagement leading commercial on been the and going guess sales, of investments, the them off, strategy First most any I have is to made, opportunities how far net yet? so and

for increased Yes. a capabilities. enhancement are We're OmniBlu. with been the as uptime does do asking. -- very has as from recognizing Thanks excited They value solutions It that are The perspective. customers have super margin good. we about engagement well great proposition recognizing uptime, both

been has engagement great. So

tougher to next that the bit environment revenue We the said, have several proposition It's very but is concerns contracts little engaged. there. point value They're signed with lead this it economic will a year. for at and

extraordinarily at product this point. busy are pitching that We

one Thanks. that there maybe year and little a And around but moving actions, another multiple early a this know is range were thinking about next thinking range now it's multiples a it AeroTech is here. at it quick that we're presumably that I now, and a then I down there acceptable are point? it's you know event, does, happens, is about? strategic The if bit

demand. tell It's early-stage business tell in getting in what Larry. to too you a to demand. recovery. is high that obviously. platform is AeroTech calls Yeah. going honestly I It's early will in It high be is that, But We're

defined so it's play here we asset we're we that we're to as to and in excited let And as decisions. about to in opinion get so that, what the markets the going highly be some after do sought early our XXXX, and out the but make going let do sometime path markets

I person. I'll think And the enough. was one Fair I then since ask Okay. more last

delayed cetera. heard about As there if it relates lot is of week was it very kind the concern will closure is Expo and Pack food is being North be order to American portfolio we et closed. incremental -- partially also this the was it and at driven? weakness and I a It this strong orders is how market is lack how or is say it of that's problems which deboning, is Or this of cetera maybe more long chain-driven, this JBT-driven, et for products customers kind of a the supply forcing let's of elsewhere production et times, problem? to much wondering much lead and cetera? or just is look driven

one portfolio about economic in perhaps our No orders probably the represents of broad, own extraordinarily been like which a part, line, the things Sure. their for the out it's Larry, exception there is we've broadest people put to they concerns seen product in heads. tend really time kind or period has past delay on until in I of shock, when our honestly, biggest the but meaningful industry. freezers, what talked is with any product of sort

we Frankly booth not you active our a I busy. booth or pipeline. if have visited as was I very very our mentioned, don't we're know but quoting,

the pipeline recognizing I'd we're just again, -- going being, So and and we be it that just be go from to as just strong like here. about smart is to

Okay. Thank you.

you. Thank

Your next the of question from comes Dobre from Baird. Mig line

Your line open. is

extend figured you I the follow-ups. call come so so get want quickly, some to off I right. didn't All this guys for I'd here. in pain

over about I I is FoodTech are obviously, packaging business, I lead kind a business, where have to times a protein you guess, a components are have that six lead I'm what is it, in relative competitors changed three wanted liquids there understand those to call that you regard? and of and how to your So the past various to business, business. ask times months in to it but there as you have curious

side. the and our cycle nine the we of, we Sure. Depending that's say, I last XX in our FoodTech will to that businesses marketplace product we terms X the months. little overall line, on times. months to businesses year hear that on most bit over consistent it, the extended the cycle to kind longer would are have short with a moreover, of six be is call are average I historically, of Everything lead medium would

Great.

effect we've as intake now is your eventually or to your ordering elongated times XXXX, that. that reaction cases, demand. that in was So If and at ahead, any curious ordering XXXX kind waning looking far what to was is and a of earlier reacting in for to starting we're seen we're little lead becoming a looking headwind as Is was double this of at some that just This strong. see in lot I'm order a quite possible what customers project, just sort in now a your you? backlog maybe where essentially it built. ordering of

invest they double two order It's I a is demand. again, margin their They -- not capacity tell engaged ordering, them crystal need microeconomics or clear. you Certainly. have. so to certainly they such this that It's to not that and Those them sales don't improvements that have systems, abated, It's have need in truly can the are million invest, that's the macroeconomics are that to not they need a the the continue cycle. that's of meeting people do particular for for highly the constraints labor for a them. and that $X concern

enjoyed we'll data our flow up of for trend, see -- a the and not go pretty to and there quarters you know, point, investment. kind order prior any expressed I'm for nature considering Mig, pattern conversations for this. of need so normal As right? six down, honestly point, pretty particularly to call It's single five, with last customers historically the overreacting the have not quarter. on their not consistent we overreact I'm next it to to especially the a going one I'm If is data us

investment making -- which year Okay. it corporate is my you is the memory that Fair enough. OmniBlu, that about in and size remind us the this that kind And XXXX? should then lastly, lot expense. of for flowing of thinking into how it Can you're of a we be through

Sure. to $XX be we honestly It's this to be -- million. to million, would to lot close year it's $XX anything next year. that but million, year, perspective, to going next $XX probably a From about closer closer not expect CapEx a almost Mig, less zero than which

an close closer to to this in the And with perspective, $XX million $XX think to $XX next with through that's year, expense million, the to would expense range closer be year, we $X million probably revenue. in and the the corporate I to $X to in it's probably then area a going million expense from the majority line of of to up million flowing expect businesses

Got right. All guys. it. you, Thank

Thank you.

will There over turn Instructions] no are this now to questions call I [Operator Deck Mr. time. at closing remarks. for the Brian further back

Thank this you all joining for us morning.

up Marley As if be any you. always, Kedric and Thank you questions. follow will available have

call. today's conference concludes This

You may disconnect. now