JBT - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to JBT Corporation's Second Quarter 2019 Earnings Conference Call. My name is Natalie, and I will be your conference operator today. At this time, all lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session [Operator Instructions]

I will now turn the call over to JBT's VP of Investor Relations, Megan Rattigan, to begin today's conference.

Megan Rattigan

Natalie. you, Thank and call. everyone, our quarter second Good welcome conference XXXX morning, to With Chairman, CFO, are Tom call me the on our our Vice Giacomini; Executive President President Deck. and Brian and CEO, and the we call, press statements subject in use In safe X-K today's language filing. will harbor and that forward-looking are to release yesterday's

our impact discussion the also These Relations documents results. GAAP section includes of filings SEC risk in Investor periodic found certain A our section information regarding non-GAAP the website. our most can factors measure reconciliation measures available on in website. that references to JBT's of Investor be contain comparable may today to Relations of have Also, an measures. are the our these

Now, I'd like to turn the call Tom. over to

Tom Giacomini

good morning. and Thanks, Megan,

talked past value years, JBT's the creation several we've about strategy. For

investing acquisitions complement in key capitalizing base, emphasis comprehensive building our Asia. and recurring to JBT services presence food and customer products portfolio on our expanding provide solutions. new industry that with in on our completed We product an and revenue positioned trends the in are We

focus For keen we've midst JBT our stronger only efficiency. not system We've of the operational few operations, making business. efficient quarters, ability and added competitor. implemented a how a more of capture a to JBT value in improves productivity are on restructuring the the strategy and is operating company JBT that rigor our and reflection but last capitalize more to we on strong performance run brings and accountability a second creation quarter the

the expectations on investment the recent quarter over capturing about acquisition focused to Brian and improved year. I'll growth. our provide for talk to detail call turn in most more the Afterward, strategy I'll and

Brian Deck

by XXXX expected morning the everyone. of expansion. transition outperformed included second X% was FX acquisitions the the was margin about ago beat Thanks, XX Revenue better-than XXX X% year and expectations ago decline, reflecting level the with Tom, contributed second year results XXX of headwind X% quarter of absence revenue the growth X%. was in with a in while small ASC period. and revenue offset This period. Organic million and quarter in good JBT's million

the second revenue for in year due decline, original revenue in our and was was of growth the the X aftermarket strength million guidance, nearly by exceeded headwind up X% ago were which was with our acquisitions not that two the revenue to from FX up reported FoodTech a business. absence Adjusted revenue X% XXXX. declined Organic included recent X% all reflecting of basis, in a period. X% increase Offsetting acquisitions. X% XXX ASC the quarter of that On

as XX.X% segment was FoodTech a originally outstanding XX.X%, organic with shipments FoodTech aftermarket mind in first. revenue EBITDA advantage of expected the XX%. business compared percentage with period. mix higher an in enjoyed were margins had up XXXX highly XX.X% half accelerated the margins favorable year of a well quarter quarter second X% into mix. Adjusted in that equipment Keep ago XXXX as were from the as in the first FoodTech second the some in

margins year X% lack improvements revenue AeroTech versus with EBITDA of associated partially cost segment direct the margins with second XX.X% was which XX.X% and ahead better X% in well as reflected quarter with period. of expected revenue. from XXX efficiencies also to as year restructuring, ago growth offset from XX.X% Profitability operational capturing reductions. organically XX% XX.X% acquisitions, of a for improved were ago. in than AeroTech ASC by XX% includes our transition Adjusted the the decline associated XXXX

ago against year essentially record and AeroTech. period. both FoodTech second year XX% Year-over-year for from quarter flat ago sequentially declined were a the comparisons the both period Order for businesses and rates orders in in

FoodTech, trade uncertainties decision-making economic among As process slow has and the customers. continued to some general

activity at America some on improvement quarter second FootTech half pipeline of conversion expect based rate and the North Asia. in in We

military Meanwhile, infrastructure, conditions payments are equipment. by million. at and in the support was with our flow about Cash associated advance by period. AeroTech remain for impacted quarter solid in as aircraft to primarily see we planned commercial Year-to-date, the lower continue in advanced shorter orders payments investments XX

to rate XX% cash We That any year expect us flow half voluntary before million that pension an the of with conversion about of get about expected free of to XXXX. about leaves full back XXX contributions. remainder or

recorded of million X.X the we expense restructuring, an Regarding in second quarter.

X the expected million. than versus X period, savings million we more of an For generated

full million. XXXX, the XX savings that of capture of plan leaves savings million incremental total in achieved XXXX, in with achieve plan to target now XX with to For year-over-year XX savings our XXXX savings we of program million. year When combined us

step In restructuring addition quarter cost EPS second up. and the significant including reflects M&A fees an associated of with $XX.X inventory the expenses, integration charge, adjusted expensive million transaction and activity

associated On discrete stock compensation essentially benefit as booked the million, with the $X.X we line, tax expected. tax of

that, earnings a related $XX up was second XXXX. XX% was second the continuing earnings of in $X.XX in On per operating $X.XX million ago. year reported Adjusted year-over-year. from income and versus the quarter of cost. per of With share quarter $XX including of M&A the adjusted XXXX compared JBT restricting an million was $X.XX we EBITDA $X.XX the share with diluted diluted operations basis

ago was margin XX.X%, up EBITDA XXX basis points from Adjusted period. the year

full year the the forecast Proseal our line have acquisitions. we to completion growth For XXXX, of top reflect Prime and increased

to expect of to contribution from X%. X%. previous organic of The to acquisitions X% X% approximately continue We to guidance expands the growth X% versus

now expected transition FX up XXXX expected be XXX in included is GAAP revenue is year, ASC X%. The to revenue million the $XXX XXXX to reflecting from the results, X% about at be higher headwind

AeroTech cost. while margins XX.X% continue XX.X% related segment expect M&A We to XX% for year full FoodTech and to operating profit to absorbing XX% of

tracking trends. of margins. earnings basis exclude full more AeroTech, it pickup on EBITDA of This to margins related short-term Internally, anticipate up operating XX% As basis EBITDA as of XXX basis is you to capturing to points adjusted of this progress to our the look expenses performance year as expect we we the M&A release, saw At in metric a on segment started a we XXXX. therefore communicate FoodTech, way a an above adjusted points we XXXX. than adjusted XXX margins XX.X% At XX.X%. EBITDA in XX% to of

excluding to a about tax project continue We rate XXXX XX% for of items. discrete

an reflecting $XX to range to $X.XX, adjusted guidance. year Our $X.XX per our million is basis, we’ve raised guidance XXXX $X.XX. We've forecast reflecting million, $XX debt. full was for On earnings interest The M&A higher related incremental acquisition now for $X.XX continuing expense the the range operations previous diluted to from to share the adjusted items.

We $X.XX. are now guiding to $X.XX to

million a to expected adjusted of our quarter to an we’re results. On guide basis, and $XXX million. from second increase The forecasting previous acquisitions to $XXX $XXX EBITDA contribution year better-than $XXX million million of primarily the range compared reflects full

the For quarter of of project $XXX million. third $XXX revenue XXXX, million to we

Our diluted earnings to to per guidance share basis. or on $X.XX operations adjusted from an is $X.XX $X.XX continuing $X.XX

With back to that, the call turn will I Tom.

Tom Giacomini

water June, enhances Last annual Brian. technology poultry environmental acquisition packaging for about group. benefits Thanks, environmentally cost Prime with Prime presence reuse laborsaving the quarter, $XX which automation acquisition position poultry sealing. provides which production. in the core With tray about Prime's and Prime significant production. primary friendly technologies technology, their of of in equipment processing. a poultry also also In completed we million, expands yields JBT's I revenue of end-of-line proprietary offers in spoke Proseal,

focused in JBT A strategy aftermarket installed wallets share to of through key investment through part has base our revenue recurring grow resources. on been and improvements

As aftermarket paying Brian mentioned, revenue to quarter outperformance second of that wasn't the it our business, also contributes is clear in demonstration due performance. outstanding is part margin good dividend. strategy strength investment the This the our to a

activity industry, Our trends such clean with JBT in growing aligned have and as for food M&A production key label. automation investments eternal demand and the

automation each portion that to operators and new hand. At identifies x-ray automation done as traditionally bones way same and are automation, optimal primals has reduces by for water-jet X calculates with yield the For time, need Accuracy approximately the guided x-ray XX installation. portion. to been this our the provides the improved and equipment

and addition, we harvesting people. follow automating X developing of are another unloading In water-jet reducing by our that further the portioner, machine, robotics the labor

with for labor in reduced labor challenge benefits market. while customers helping significant of facilities tight the there financial staffing them The creates our

the customers' clean as this and our the to Stork label that customers This label clearly have expand of Avure demand consumers and processing our acquisitions front, aseptic On trend. significantly and to technologies we've product and support ability clean enjoyed the reach label offering. their year, of enhanced pressure portfolio respond wins JBT's high products global number a

will aero to food macroeconomic markets these continue to in we take tailwinds JBT allow long-term see strategic and our position Overall, advantage of both tailwinds. and are confident us our positive with

our where M&A through further robust. position activity our enhancing are We pipeline remains

will to With your call that, questions. we open Operator. the

Operator

comes of And George from question line the CL instructions] [Operator you. Thank our of King. first Godfrey

Your line is now open.

George Godfrey

Brian Tom. morning, good and and you Thank

being second Is push we you into think on something customer question out that how a And this half do the think little a question ordering quarter in have versus Thanks. come can comments like to as a on weakness. is, seen the the up? tough your and you this long about and your basis? it move you quarter-by-quarter did I have Just they economic of hear compare, activity year? order bit My a ramp

Tom Giacomini

parts. it's requires their is productivity the some have would the to for it’s more ready improve If to their there morning, certainly If business, market. have in of and a they investment they consumer our or in them latitude more deadline efficiency go I Good two customers George. investments it product tell on that a or a generally, be to to takes and supplying, timing. you are some of an customer to order really which flexibility drive new to time results or place the timing

may activity up. or take of form some that sometimes that aftermarket the we rebuild And tick

So, parts. really two it’s in

All added ready we front you and the JBT’s customers long-term, talked, tell But we would right product that side. to foods have in the consumption to to make our pushed microeconomics working that food labels. sure the of clean increasing value trends those and meet customers’ in we’re demand really we’ve create our protein I offering tailwinds and and hard protein needs. believe meal More liquid the convenient on or position do

advantages marketplace. confident of way take is So, year our shape into work we to great that as in the the years, following those I’m JBT the and trends in through quite

Operator

And our Maria from Blair. of question Larry next of the William comes De line

Your open. line is

Larry De Maria

but could was discuss bit little into the that, XXXX. orders as the some of just go softness puts talk I and obviously, hoping we you maybe takes some of about, and

orders organic takes up add maybe think could some about now, some we your the X Given for obviously And plan are and of we’re we So just framework weak as sort puts thinking with then, get the X relevant? various us recreation where year still year? to to about of and high restructuring? and next some still a next for for think about give level start

Brian Deck

Larry. morning, Good

XXXX, So, higher can and would I on I range put but XXXX bit organically was prior within to acquisitions. not when a on well the $XXX which about at to back the with I on million, revenues, on us revenue pace point, different well rate the we’re talk within prepared above you really tell acquisitions we’re we is well the September way margins, growth framework work, well with EBITDA we’re we’re lower pace for tell in the about the range we’re I think looking acquisitions what on of you EBITDA the look pace at this that in little would be the

So, our where we’re feeling XXXX. is guidance for very comfortable

Tom Giacomini

I remain of advantage take rates do the and convinced very have grow will markets strategy those effective Larry, with longer-term, that a a growth. to In we

Larry De Maria

you there for just in us at? in that then top will also the remind can a incremental go on that XXXX high discretion, from incretion restructuring And more you've from obviously year done savings level we just incremental us out just of where deals that then finished remind -- guys and XXXX next

Tom Giacomini

about terms incremental the restructuring Right, $XX another. currently is accretion, acquisition in then And it’s so, of savings million. the estimated about

$X.XX on EBITDA We another that year somewhere of interest to to in then months with seven $X.XX. five minus $XX another year that this $X.XX adjusted is million $X.XX expense basis have et going to cetera an next months of guiding is and activity be with

Larry De Maria

some we Thanks. impact discuss And just lot the a secondly, question how just alternatives that’s of ASS about those there? things? non-meat impact, then through too. so these two Can playing maybe of And got the out you of this

Tom Giacomini

Sure, Larry.

On the the for that you packaging side Larry. follows, essentially tell from non-meat equipments alternatives very similar. freezing I technology that add added of perspective, would example value the It is above and our flows the

finding just Flu, equipment Asian it is like Swine similar. or a in that. business So, think are ASF, more the to we the nuanced our and because good of a bit thing The for opportunities

think of couple an impact countries global total kind particular. to production Asia, that’s in certainly China and have to You demand, the about and other pork in of

But producers, room underneath particularly it’s positive a I is that for we because in come pork U.S., up opportunities see that for pricing for pricing. is which pork creating poultry causing pork some additional uplift creating being on that is general, to then JBT increase export in prices which the

for So, be at believe helpful in thing, of and we trend this a that and good our the next half year. that’s a back into general should look year as early customers, we it’s

Larry De Maria

Thanks.

that slowness the new seem close actually alternatives? taking clarify, is And are to non-meat That and just you of orders. So my some last new. doesn’t question around orders these just then to with participating

kind of about guys awhile. for You there talked

materially the is kind a little changed quarter? Or start-stop the really kind same than is it bit? has in which more of So of

Tom Giacomini

the So, on two-part first question, part.

the to existing industry. and of for We non-meat that and quote the infrastructure on some in equipment some done on are that’s has the seeing more the been work opportunity food Larry alternatives, early

it do are projects going some and people that North customer right and get particular help see strengthening we into in the to second us of this we think some talking have see it’s last conviction quarter or have that uplift trend. around changing we seen the you’re part, We We’ve America on some a Asia been And QX and two. QX although our in materially not orders. about and don’t both are

Operator

of our from Dobre question the Baird. comes And of Mig line next

line open. is Your

Mig Dobre

revenue revenue they has if through don't. Yes, good I'm FoodTech, much, looking up doesn’t that show flattish answer your in $XX that orders orders, at exactly all of question for I'm the And Brian, and When backlog? materially up there you, order million. looking not down backlog morning just a everyone. portion has is of think at mean sent close your I kind goes should and in eroded basically I what sequentially backlog reported and your this, I asked because, maybe I but know all I picked to but to a were that? you pretty

I'm obviously, Can you me something So, here. help that? with missing

Brian Deck

Sure, everything run our does through orders.

is The big sorry from does that chunk the missing. On orders, it the Prime, piece go same the the acquired aftermarket, on you’re EBITDA and comes acquired that quarter. backlog posting typically in a you’re -- missing the that’s acquired

Mig Dobre

million I’m Okay, a of your basis, I like something least my like back or averaged the Orders last guidance, that. looking see my and should Then at XXX the looking quarters. we XXX sort year, it at on have sense. call on revenues almost the That makes looking maybe of looking a we're some XX month at question of is half rolling model about at this, based quarter. per be when more million if fourth on

Brian Deck

For FoodTech.

Mig Dobre

gap? that do we you equipment FoodTech. aftermarket either on is this be that business sequential that all acquisitions year-end? to you is kind in Is think you'll inherently How that? able of essentially all some deliver on baking your your acceleration FoodTech, or Or original yes, it that For convert before are bridge this

Brian Deck

of And Right, revenue. are somewhere so that impact or just a based bit a you between versus somewhere six QX, months revenue, And then have on FoodTech to of the million QX X.X% be what QX. a a improvement of the rolling relatively XX normal year extra of the in range ago, in XX ago. to seasonal then, versus will in going year add, is growth acquisitions so progression half organic organically terms revenue back flat little so progression for it

Mig Dobre

see, okay. I

primarily that. acquisitions it's essentially So,

Brian Deck

Yes.

Mig Dobre

mix? had you've than it in again a not I'm And you about of in guess can margin talking maybe XX. half that Then question the if great. Okay, And or but thinking your in helped maybe that margin trying I the FoodTech is. conservatism understand quarter? what this expected was second driven understand quarter is second about to or much whatever by quarter sense. makes your as better separate as of We're sequentially. specific good items one-time I the looking Thanks. all you're I do obviously and quite Is essentially the mix what that's factor guidance, I'm back how

Tom Giacomini

the in to be Right, tremendous about what strong equipment. trend previously back aftermarket QX points guided some pretty expect of activity then was back actually on basis XX we that’s the the to trend. of an the We margin we see the going at you of XX% our based when to. The that increase don't half aftermarket the normal the on were margins and about particular margins in look mix, effectively FoodTech, some margins

we as dollars, bit our EBITDA revenue from slightly Basically, got more a half well the back improving effectively cooperation's holding getting and a down benefit little well. as coming restructuring our as

are really, just said. not back expect mix get actually So, aftermarket improving the half in we really versus we what -- saw you just to don’t in We're margins going QX. that the tremendous the previously

Mig Dobre

if year-over-year And a And XX way was year-over-year versus the quarter? may, benefit what would is can question what Thank And in the you benefit there half be I’m in help that XX? us from back done. of I the in FoodTech, last the understand you. restructuring

Tom Giacomini

Right.

in in million we So, -- we a that's QX. about aero. quarter, And as mix XX-XX so progress, mentioned million to through it's the about $X had about we food X

XX it's million. So, about

the the now, in savings XXXX, XX is back this the we have to did $XX So, half all to half incremental mind. in some keeping million of get to relative we And expect XXXX. back million.

of cumulative be could about would expected back also XX-XX still I even bigger, split. $XX a half actually it million is So, it expect the but

Brian Deck

Hey, Mig. ahead. Go

Mig Dobre

not year-over-year number? that sequential saying million I’m sorry, it’s but the number, $X a a that’s you’re

Tom Giacomini

correct. That’s

Mig Dobre

quarter. second the In

Tom Giacomini

That’s correct.

Mig Dobre

Okay.

Brian Deck

kind Hey, bringing against just year Mig, core to I for out prior that. would our the together JBT just of year, like for it point

look still if expansion. translates trends guidance XX% -- it XX% adjusted results EBITDA the the of to points at For growth great XX some full margin versus basis core year, top line you to growth,

perspective, our result. year from strong pull if you So, a kind whole really of the it’s together,

Tom Giacomini

And XXX, of excluding of to $XX of benefit million XXXX means ASC in quality the profits. terms

Mig Dobre

these pieces get is a me hard questions. many I just all for moving that straight, it I’m to it’s it’s so which is that that, Right, asking there here keep why

Operator

the line Global. our from of question And comes Walter next of Seaport Liptak

Your open. line is

Walter Liptak

doing of aftermarket backlog, in in were I And mix? of ask great try And the is that You Or of similar the onto I’ll customers about more products? margin and wanted the in in lieu question business? are the have margin. what positive side? higher poultry that's FoodTech orders the in FoodTech ask absolutely are the The way. this to and or that FoodTech aftermarket of out follow to beef kind similar the equipment Is the the the looked it products mix on or these mix. pushing like is maybe What then mix this

Tom Giacomini

Right.

predominant was side, So, both have about the about right. XX% quarter. mix, recurring again in on normally the XX%, the quarter, aftermarket We're get we the second in benefit revenue around the

was So, of basis and aftermarket. and higher the had that there, carry margin, across margin It you and both protein was liquid itself hundred points obviously a couple on food. the nice the

So similar. that was fairly

goes of into comes and of mentioned mind ton in aftermarket, we and earlier I in don’t it at that QX as period. kind in backlog go we and have backlog As keeping QX, the look the the

is So, half and reversion that normal of we’re in equipment the back margins versus I aftermarket the looking that at mentioned. mix of XX% reflected the

on half, last but QX where when It the expect were back started at about we that normal full we to of and we kind the which where the FoodTech from of you what margins year year look will margins, progress QX to XX%, for progression.

Walter Liptak

or U.S. the help the what customers. about that orders in of international lower do exactly, happen flag? commentary and just are to customers Thinking I interest the in up the to And great. comps about rates insert, has getting or matter be is start it the to Or should to picking happening home to if or concern what is easier? the you could that start your Okay, it is for Is something means wonder microenvironment it you again? it orders think see orders us

Tom Giacomini

project. activity but lead we order up would Walter, the which tell have to you with customers I is, our an or

a that and about customers we’re really attribute or we’re are We the maybe our the uncertainty that local really it. and economy. between quality and we’re the we’re to more the the corporate, and pipeline of the our discussions with economic working and and level What with as some time we specifically this just approval longer trade of very facility with having projects encouraged on people the working level seeing to general around

that resolve starts And to I you most in think would were the tell of either on would front, I particular that those anything helpful. trade factors be

these certainty other Asia Some around agreements that haven’t trade and of some been resolved.

they So, around completing there their they’re can some their as the food produce desire. are to ability that world have stuffs confidence when customers and facilities around those move

we customer as that we’re work and positioning be so our gain continue out. our that are those take a benefit advantages to and confident happening, be translation. we’ll quite to the the things And quality happen we’re have those end those And projects, comfortable in ourselves that just customers of that work to position the ready, projects, themselves from at engagement, confidence, as the need issues to

Walter Liptak

in that trends great. Okay, and the sounds Were the U.S. international? yes, were the versus same order

Tom Giacomini

talked there wouldn’t plant we just ready going I uncertainty. be some we equipment and the that be is year. always continues Asia deal half given developing, we opportunity trade economic so slowness, But that of to under pretty Europe about, the our as pipeline when the some movement with general, in America cetera, and et we much see North the in describe projects specific say would the customers' few was a as saw although back I we did in slow way for in much North expected to see in is even America.

we the that half it's back worked don’t’ as see those should us with that issues themselves help setting year of in the trend customers. a out the quarter being This

Operator

further [Operator Instructions] I’ll to questions And Mr. Giacomini. remarks. this are state closing Tom back your Please turn time. at over there no the call

Tom Giacomini

As our we’re to restructuring and place and ability win again the JBT our significantly with us for you've to creation JBT morning. benefits enabled strong actions. strategy We in continue deliver financial results. from market to is Thank this value heard, pleased capturing improved the you joining

Operator

conference today’s concludes This call.

may You disconnect day. have now great a

JBT Marel (JBTM) 30 Jul 192019 Q2 Earnings call transcript