John Bean Technologies (JBT) 21 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to JBT Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Audra, and I will be your conference operator today.

As a reminder, today's call is being recorded. [Operator Instructions] I will now turn the call over to JBT's Vice President of Corporate Development and Investor Relations, Kedric Meredith, to begin today's conference.

Thank you, Audra. welcome year-end and conference everyone, morning, to XXXX our call. Good our on Officer, Officer, the me Chief Matt call Financial With Chief is Executive and Brian Meister. Deck; to forward-looking today's on release press our an risk filing. JBT's also that In factors will filings X-K harbor use results. SEC information we are in call, and subject impact contain the periodic yesterday's that safe language have statements regarding may the Investor Relations of These are available in documents our section website. measures. includes today our non-GAAP to Also, references certain discussion these the website. Relations to GAAP can of comparable reconciliation Investor A the be measures section measure most found in our of

Now to the I'll turn call Brian. over

Thanks, call A a Kedric, lot me everyone. ago, last months our let so since and few morning, dive has good in. occurred

merger for We be our products, globally providers with As I'll merger would great customers this our of about with solutions and performance. Marel. that, but together announced you food pursue know, JBT X transformative believe synergistic first technology financial shareholders, its provide on and bringing intention beverage exceptional more color brands. and a recognized to

On very XXXX. strong XX%. pleased JBT's increase revenue, X% EBITDA results with full in increased are adjusted in We year a

guidance walk guidance generated through further expansion. Moreover, with over flow We we XXXX. I'll you performance free turn which for that, our revenue With Matt? to XXXX, a well who'll introduced our over conversion strong also growth Matt cash and margin financial for reflects XXX%. continued call and the XXXX

Brian, and Thanks, morning. good

outperformed full earnings our guidance on a year-over-year we last Our significant improvement in quarter fourth the profitability and year and reflected performance call. provided

restructuring of enhanced mix performance. per $X.XX XXXX basis points diluted $XXX million. $X.XX margin X% and increased the EPS operating we increased EPS were We efficiency, to revenue margins EBITDA year-over-year also and $X.XX year-over-year, compared versus benefits with with in our of XX% year, points chain and recurring continuing XXX by favorable our earnings XXX full supply to initiatives. grew basis of improved the revenue an from cash adjusted Adjusted very share For pleased a driven primarily flow delivered savings, Adjusted from XX.X%. From perspective, EBITDA $X.XX. operations XXXX gross

year, conversion million, XXX%. full of any AeroTech, was a representing the excluding free impact $XXX rate flow cash For from

year-over-year cash by inventory and chain management flow free increase Our operating improved. constraints in results driven the in strong was as XXXX better experienced supply

XX.X%, due debt of to was adjusted the associated ratio resulted end subsidiary, EBITDA a a year-end, tax XXX with the execution basis payment of Fourth the in the on X.Xx, year-over-year. EPS, XX%. Adjusted of increased point from adjusted net tax sale quarter our slight an quarter to EBITDA As a margin $X.XX of improvement of XXXX sale the excludes increase strong discrete the benefit third which AeroTech.

top X% projecting from X%. FX line we solid guidance X% excludes X% Regarding which organic, are or of of XXXX, to X% our to for growth the benefit

recovery in Our we about guidance market half work to American show from organic year. the expect price to and the equipment back price/cost North poultry X% some stay as X% growth from revenue includes to X% impact as neutral, demand approximately of we

growth for demand from as warehouse strong expect automation. been our we see business backlog built that Additionally, deliver to has from we a AGV

continued uptime revenue as adoption. Finally, in support as continued ramp recurring equipment growth we OmniBlu in are our to as improved in well forecasting aftermarket customer resources we from invest benefit

to forecasting XX% $XXX EBITDA are million, million of $XXX year-over-year of adjusted For growth the XXXX, midpoint. we at representing

restructuring chain approximately points along This $X of margin leverage, reflects million a year-over-year initiatives our of $X XX% with midpoint. result of basis the million. operating benefits XX increase Our from at the XX.X% of supply to guidance is improvement continued to savings and ongoing

earnings to And adjusted guidance of of we rate of year increase guidance XX%. and free interest in million. Included first resulting EPS year-over-year for full the XX% full costs a conversion adjusted net $X million of cash approximately our million of intended tax in to a $X.XX. guidance year half merger to of represents finally, flow of share is expect to M&A per $XX more year our million midpoint, anticipate $X.XX about which in includes XXX%, $XX the At related income for We XX%, than CapEx the Marel. the offer $XX

As we excluded and ranges cost assumptions. our from On XX are January our from guidance EBITDA adjusted these adjusted basis, a reported M&A versus preliminary have revised reflect a costs outlook EPS. reminder, M&A updated to the GAAP

costs on to we year. will as move We estimated updates throughout continue the from merger potential this provide

XXXX. The terms first in profitability, we revenue will and trend quarter is slowest in expect continue traditionally of our a that seasonally

timing Given anticipated XX% the poultry XX% North markets, XXXX of be revenue expect versus in the half second we American total the in of to approximately recovery XXXX. the

flow in sequential back margin are supply We turn actions improvement market quarter of expected me Brian. through each let that, results. the the are to and forecasting With chain XXXX to improve call to as conditions

Thanks, Matt.

poultry million solid We momentum Europe similar were XXXX year Asia, quarter, the we third, trends to order good X% entering strengthening a orders are the full and orders backlog. order $XXX fourth enjoyed and quarter from Fourth increased industry. in with including and year-over-year. the In

last poultry annual about are interactions JBT's rests chain Overall, yet customers, are as we we equipment for IPPE, gears, margin from our recovery entering initiatives. poultry of for improving. We few greatest constructive. that was the industry's in and conversations While best more the where known demand our was a recently North years, supply have on dynamics returned we've from improvement the ever. market. Switching American belief orders the among period show, mood otherwise upbeat The from that opportunity attendance the the our support improved price/cost as talked to see

hyper-focused XXXX and pressures us supply. chain shift on supply costs to XXXX, were optimizing XXXX, and continuity management. inventory improved, resources post-pandemic Given conditions chain our of In we during supply and allowing focus to

focus AeroTech, chain more supply can of we sale base. a our on efforts With supply the homogeneous

process quality spend we strategic can JBT we components engineering our to consolidating in performance We in facilitate inventory lower in to design XXXX. also of on value our to and quality We promise generate improve and and to customers. standardize XX XXXX initiative, without work success our XX of efficiency are management. margin of base. We're where will the This purchasing plan or supply the concentrate captured complexity incremental product build costs, manufacturing as engaged a our improve reduce to delivery of compromising chain and we economic engaged expansion some basis in points sourcing supply

-- reflecting XXXX acquisitions. end strong diverse you see strong As our and prospects our guidance, business XXXX and model, our mix resilient and from business in our performance market JBT's product our remain can bright, value-added

create proposed Beyond achieved, broad we've a what the stakeholder already with value. unique opportunity Marel to represents merger

We tender from And proposed of which to course, subject have respective is quarter. offer the believe the launched not now most will approval Marel, second clearance. the and we merger likely regulatory shareholder in yet occur

address and will combined with could commercial hold for even and it enhanced the automation fuller growth across the to in share we pet JBT's meantime, customer would expect chain further growing we and an The identified would opportunities care levels of share. launch. plan digital optimize we the our company. organization to efficiency believe and Furthermore, The our more R&D customers solutions, ongoing here's care than Innova synergies million complementary on by priorities, OmniBlu the cost through Marel's to the And food, engagement improve including make call to our sustainable demand reach of portfolios that combination can We We do years plant-based expand more equipment develop completing offer cost ecosystem. Even about line the capture the of protein easier capturing We the global comprehensive what customer customer post be the before $XXX and synergies, our transaction would would resources. and considering for business in accelerate will expanded and cross-sell revenue uptime base. complementary supply and the we X leveraging service ability conference initiatives collective solutions within by would improve solutions processing. Scalable company transaction. footprint an and have of solutions. meaningful, digital which combined to protein, innovative believe

spend collective we optimizing Additionally, leveraging our benefits manufacturing and efficiency. G&A expect from

talent ownership. is organization. Plan will Importantly, Board will we be company a heritage. on way secondary Marel's company's a have in of European anticipate on supports respects the are business Marel's best-in-class Iceland, JBT and to to their that combined to the Directors We will and Marel. building combined the pro have that Nasdaq Iceland. headquarters -- proportional a committed named in shareholders are the advance listing that have we the representation shares to forma a And company expected

to which flow and is expected company less XXXX, Assuming net any the improving EBITDA And closes ratio X.Xx, the the leverage of remains XXXX. With have at merge end as profile business usual given we by transaction prior leverage cost than cash activities of intention strong business, all of the surrounding Marel, JBT. would combined synergies. year-end to the a for to be the with well the it below combined expect to Xx is

JBT's Our priority, the make as always, your that, Operator? let's globe and employees service that every superior that customers. And happen take around to With solutions questions. day. is it's to provide

Instructions] our Blair. first William De at from Lawrence Maria [Operator question We'll take

check just tender. to I wanted in this on

X think more the At messaging say and weeks then most you the I to was IPPE, diligence think So XQ. X likely tender. of I in

the I I So regulatory slipping time secondly, little it all, is, the started sooner. bit? have have a of And you would And first process yet? the think question, guess approval been is frame would

Right.

found to SEC more regulatory need as the through to uncovered it both we've the the part streams the work side, prior just of timing that, of U.S. specifically, little with we as the Iceland bit get we all associated as relates all launch. So to time a and of requirements that that on

side, process continue the a with getting filed we're just streams. And problematic to that. particularly that, are while nothing It's in of of jurisdictions we through on terms -- as in. antitrust collection, do data work haven't formally So the file yet, part of that understanding going the we we matter which

a of tremendous with antitrust that's So drive the transaction. amount longer in the that's work going to frankly, And overall pole associated the that. tent the -- there's timing is and of and

everything focused So of completing the by we're end on still XXXX.

questions. through and then X process Okay. we're -- this the going secondly, learning, And -- you're as going

overlap shareholders, kind And approval it of for you feedback And sort what started so to competitive? complementary if talk think to confirming of secondly, the have the around you far? more from is them? what's is First, versus so, dialing been Marel's

Right.

the So the is the mostly first as we question, have complementary, -- expected. portfolio indeed, on complementary,

particular from antitrust don't we issue. a So see, perspective, an

think perspective, from we quite However, customer it's a value-creating.

on provide around some hypotheses value could the combined So our and a and could basis. what company of suspicions combined that it is offering and like the look confirming creation we

engaging of order have with in until have start front no, terms In like formal them of yet. launched in won't after started itself. we tender to That offer. would not Obviously, the that until occur launch the not to Marel's shareholders, that so we to, speak we something

Seaport to next Research. move Walter We'll Liptak at

Wanted the just And pretty first a XXXX big of about like to the sounds EPS from question a improvement. is fundamental outlook. margin part ask coming maybe it growth

through wonder is that so And Are could more of to chain, of supply where happen, from. has restructuring cetera? some already et us of the maybe some the come restructuring I you going that's Is if to it buckets done? just there walk

sales that Matt. we're the we've that margin from improvements benefit going expect. I'd dollars, the EBITDA say and pure Those from getting probably taken. the XX-XX between it's savings that already the margin the it's Walt, actions say I'd growth it's restructuring then are the come from to improvements we volume in growth Yes.

part, it's $X $X and done. end most happen bit half. are expected able little is to a million, should hit of we quarter by So rate those the the very be in small. And savings actions already that's for between here to run and be to but for those There full first going are, XXXX the the second million

that the costs, bottom the the into leverage of the we And benefits margins by the piece it will out chain saw continue investments being the now So certainly, some XXXX XXXX we team as better to get through that's well portion of benefit. the by growth fixed supply make other cost taken then we offset a chain line in getting we activities. And is actions that resourcing with to both value need support on. grow additional drive supply the continuing benefiting big because just to follow to to as going which to somewhat on of are be as want organic through engineering

great. right, All Okay.

that you do through the Are orders is OmniBlu? is Or aftermarket equipment? think answer, just of the parts flowing of we volume from much benefit margin the this part how On coming volume seeing are from sales? from the

in XX-XX-ish as say and I that, are for certainly we seeing from XXXX, we're Yes. improvement OmniBlu mix. mix -- an that would expecting And terms type still seeing the additional of contribution of we're part side.

We converting our new are in nice adopting lapse. contracts old as those iOPS but customers platform some momentum to see starting also it

mix no along said, on do protein So -- the with bit good momentum half that are I back AGV we we excited of changes little particularly there, the major Like XXXX. recovery in have growth side, equipment some because mentioned, we about year the so the a on side. higher that. But in some the of

We'll go Baird. next R.W. to Mig Dobre at

or sort how finer And QX margin for well? year-over-year see You a maybe? the on the the for either what's point year point starting you Can frame here, about talked sequentially? revenue we seasonality maybe but of as put

Yes, Mig.

is that is in on And like poultry. year-over-year. we're nature not XX improvement revenue there half an of certainly But in do we're as But the basis I We than And saw some back the will the improvements quarter as of seeing margins. going the think North for the full we of to I'd XXX to improvement because level the in said, year year, better last same recovery then modest to there -- in in say quarter to growth margin American year-over-year, certainly, every expect first quarter. full be the see the year. I would seeing growth for mean, a QX. point we growth be we that in see perspective, that

That's helpful.

strong right revenue, you've growth, $XX recurring out on that double-digit in growth be if slide the mistaken, you that call in recurring in Looking not the through had your is that that deck, math you Slide of X, And if performance revenue. kind I'm had million would my 'XX.

to in obviously, you guidance much, but curious as implied So you've what's lower been 'XX, growth look I driving in growth that in your for revenue, calls guess I'm into recurring. And much had as still what than 'XX. recurring

function be I'm as what just So just to curious of kind a of is here, it comps guess or changing I tougher might maybe?

some more keeping and couple say, a output mentioned we primary of deferral in of there and on would CapEx strong I to refurbished without make that purchases. Right. say Yes, stable there's things. having North that again was, saw investment, the particularly thing more spending America, I'll new as projects keeping equipment was things,

-- you'll bit So obviously, XXXX, as that they switch a in little bit equipment to to a little of back from from mean. see new moderation new the

I the say, driver. primary that, So what is would

sort some like of of, I 'XX? disproportionately there that something been benefiting Were might the benefits know, revenue recurring pricing sort don't the or in have

mention, on captured One Mig, and we however, bought of would at -- I we think, I bit equipment revenue would Bevcorp should both a wouldn't yes. little business. on -- I what, say that I that generally, materially a August is and -- recurring we see XX%-plus we say obviously XXXX, different. they're the thing aftermarket. increase price say I is

So well. a that do you full of get as benefit year

would So growth some of be inorganic that rate. in that high

That's interesting...

recall, you if about they've recurring revenue and so million got of or about revenue. $XX XX%, So XX%

You enjoyed X full of we that instead XXXX. months year that benefit in get the of the

makes that sense. Yes,

sort would or if this guess I down there recovery be? I'm the poultry I if or mid-cycle business, what I'm OE other maybe like us that you for of know is 'XX? XX% And into in is here, as of not had that the OE at what 'XX, it verticals source at was And there side I And the in you don't like declined terms to curious, swing OE would a looks of factor were poultry what. of running only what pressure was mean, things as the frame of you do In 'XX. look of business way specifically, you misunderstanding well? in sort in call

Right.

was in largest frankly, primary year lower growth equipment negative contributor you're orders. equipment on XXXX, had the the was would North into year, throughout I The side poultry slightly XXXX. the, order -- American that of in coming that book clearly culprit and say, the some the So to right and

would that was XXXX, The robustness normalized food I more that for to, food. and matter, in other in we was in XXXX, the levels reverted. reverted a XXXX Pet it saw It to say, but compared area XXXX, remained pet that XXXX tremendous. real decent market

ones. main were I'm then what question? part sorry, the was those your X So the And second of

Yes.

but consider markets you've demand I where would As you normalized are factor end you what in, pet about in of running be clear not terms in of XXXX, I'm versus do in guess have you been terms in bounce-back what's in about 'XX of you to you growth? think compressed? clear terms think were food what do And where on a demand. you normal poultry that in these

Right.

-- normally in we normal that's say XX% the right, aftermarket. say, think full got side, don't we converting right, that going a on front north in the expect this on the mid-cycle I XX% half because North than down the see by would we start recovery that I what America, So here year receiving going back we to don't bolstered to equipment that than versus, of be. more in would But orders would -- we're half. to equipment, lower -- revenue somewhat year, and We

So half year. And will, more say, go kind things halfway recovery of expected, mid, kind recovery, back the of in XXXX. I as a full if I'll if say that of you would in in the

the this Brian at remarks. time. Deck I closing over questions there [Operator are to further would turn Mr. for Instructions] to And conference no like

all morning. joining us you this for Thank

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

you your conference Thank for today's concludes call. participation. this And

now may disconnect. You