JBT - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to JBT Corporation's First Quarter 2020 Earnings Conference Call. My name is Cheryl, and I will be your conference operator today. [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

Thank you, Cheryl. Good morning, everyone, and welcome to our first quarter 2020 conference call. call Executive President, Brian Vice the Giacomini; CEO, Deck. on our and President me are and Chairman, Tom With and CFO,

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

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

Thomas Giacomini

and good our workplaces and impact the COVID-XX has our been pandemic. a of There since world, the morning. result a on Thanks, tremendous communities last as call Megan,

incredibly by organization With our who the the operations these created our at challenges have of team difficulties unprecedented I managed the our way thankful very been at levels global as maintain air members through transport for it the around food JBT a essential JBT food clear and support all mission and that of to supplier is am has Never critical critical goods in industries. to a production important transport the their world. pandemic,

our continue the that the taking this of four an markets. And began, and maximizing have crisis of operate health activities. company, long-term difficult JBT. we our created and requesting the changes we unrelenting safety customers; protect commitment support Since best employees; to in sustaining to the at One, we steps customers two, by them of communications have priorities time, many navigate opportunities our end their four, health three, our the and care to received our we as essential all in from

positions we are will sheet prioritized our reduction. capital As allocation now and debt protect solid by discuss, liquidity disciplined balance Brian through reassuring, positions will

JBT benefits from an experienced and capable team. leadership

have with instituting very by to policies employees best work return to managers Our WHO frequently practices executives on quickly requirements, employees restrictions pandemic, and general work-from-home and CDC and extensive travel communicating safely distance the guiding and including the work responded parameters, post-quarantine. policies how reflecting issued to the our

We also moved first demand. to structure market quarter quickly in our align the with cost

to pandemic XXXX. of call Brian. impacts talk will the discuss briefly turn quarter, I'll first provide He doing about over and address on color financial the to what we additional our will the are

Brian Deck

and morning, Thanks, Tom, everyone. good

outperformed quarter guidance. first Our

revenue quarter expansion driven year-over-year revenue million XX% ahead on X% $XXX FoodTech from primarily was First of year-over-year, by at acquisitions. XX% contribution grew a AeroTech.

cost at were led And well recurring AeroTech, on aftermarket margins of expectations. benefits FoodTech year-over-year respectable up Segment will initial quarter expanded and of more the as but revenue as I expected were light compared the originally increased from our strength X% first Orders strong to the contribution actions, a the for by demand. shortly. recent the XX% discuss revenue than X% which million, trends in $XXX FoodTech at revenue and to quarter parts of

the per our favorable and higher restructuring the first with expense corporate partially forecasted offset compared interest $X XXXX earnings year and $X.XX year-over-year expense, help, additional of of generated by program costs, share from With $X.XX we the in quarter about M&A Additionally, period. expected. as line posted we ago savings tax million, of than in

was $X.XX Adjusted EPS $X.XX. versus

was FoodTech the opportunity had progressed million the that a EBITDA of million $XX costs, XX% sizable As for M&A year-over-year. of quarter. during discontinued Adjusted JBT expanded $X.X

expectations was orders. of the connection lower-than-expected year deposits was as million period. ago FoodTech free cash of equipment short in customer with quarter an result First $X primarily over It flow a of improvement

obviously, a liquidity we're are quarter, While we very one which in costs economic environment, different are pleased now with in and performance facing key. the JBT's managing overall

we'll quarter, included take On cuts halting steps and a curtailing action incentive freeze the pay meaningful discretionary raises, structure to to continue actions to during align demand took compensation, side, the with we the instituting These cost making environment. hiring and our significant spending. cost

$X In the and hours implemented reduced leadership unit of share demand, business XXXX. and $X.XX temporary in our produced to impact addition, functional quarter furloughs million team actions where base of lower we've The In response per also of necessary, layoffs. have pay reductions. savings and first executive the work committed to approximately or and

expect in identified For we that basis well as sequentially. will quarter cost should $X as additional we reduction conditions a or QX, on which reflect a million actions have structure million deploy year-over-year can of warrant. Further, our these business additional actions, cost $XX we steps, full a

As at this the priority CFO, of leverage. time, liquidity is my managing our preservation and

million end, plus credit quarter $X of liquidity capacity As the our cash of consisting total billion revolving at stood $XXX under facility. borrowing

adjusted XX-month trailing times. X.X was Net EBITDA debt to

conservative a ratio, was more bank definition which slightly times. leverage Our uses X.X

have our We banks, XXXX covenant and maturity. favorable relationships structure a a with strong

CapEx collections We by inbound projects, and slowing improve to and are limiting measures preserve shifting our maintenance inventory better production to resources levels taking the to to essential new requirements. liquidity match specific of support AR

we curtailed While have remain a component our acquisitions M&A key materially of strategy, long-term activity.

term. share contributions to forgo in and the U.S. plan also near We repurchases pension

under decision We delay the to necessary. to reevaluate able that ability going to be if including to payroll but we'll and intend Cares dividend, from currently our government income maintain the tax Act, expect programs forward We certain benefit payments.

stress run XXXX. have liquidity, to leverage positioned JBT scenarios liquidity We through multiple test is adequate well and to and maintain

performance. various around assumptions degradation the conservative contribution Specifically, capital around these scenarios and revenue, working of assumptions margins, actions levels of cost apply

low and more to assessment, above free leverage times remain times we the likely positive to scenarios full million. would bank year our mid-two three cash expect in versus $XXX four in liquidity Under remain the consistently range we the to expect flow. Correspondingly, covenant,

assumptions we the have made the rapidly impact pandemic to are However, impacts planning. the scenario could and predict, in difficult of our evolving which

be much to but resulting long. to recovery, and me are time. operations, we nor We perspective some possible health Let guidance the and to for how of provide as our to adjustments endure through we from don't pandemic and know the thrive year as second full quarters. as customers this the XXXX Therefore, and JBT can we on deep this Tom will Based expect economic how the at share through turn a to in withdrawing which will our company XXXX. how we our slowdown input insight shortly, go aim on third

to estimated considering FoodTech impact backlog at hope the We third XX% cost to basis in see for and at the the further could quarter expect orders we or revenue the cost QX. we XX% be sustain with with FoodTech to a XXX weaker a to decline AeroTech, provide on actions second slightly XXXX, call. be position higher may further AeroTech. of decline in and earnings seasonality loss At able or known may an the given At offsetting revenue next QX information, referenced the the the We insight margins margin For I market in points offset AeroTech, we to volume. actions. more our foresees quarter sequential of could lower flat than the X% and Directionally, significant business. a at and sequentially estimated company of experience XX% margin in contribution more improve FoodTech, on revenue, see an as contraction the current of in to margin based sequential uncertainty declines decline

that, With call back the turn I'll to Tom.

Thomas Giacomini

time. understand to absence XXXX JBT we better the developments in need recognize your guidance, In through Brian. markets this and how operating full-year of our end Thanks, is

start going AeroTech, very with by market. end greatly business I'm to prospects where

The revenue airlines contractors infrastructure. XX% and Looking at airport of ground on breakdown our AeroTech sales to The XX% of impact quickly. pandemic defense the cargo About and a for sales XX% has to of combination handlers the represent are and authorities sales. Direct remaining AeroTech. of business occurred related is for our about markets.

Airline orders equipment year. have also mobile what from XXXX. and related some in in declines very given see business, expect visibility of the handlers equipment for our the the fallen provided and unprecedented we equipment has ground travel wave to stopped demand buying remainder has Airlines fast for little ground support but air we the

significant airport less vulnerable is due utilization expectations. recurring low We revenue believe to rates, our fixed equipment a XXXX. infrastructure reduction demand spending, that which have business, in our aftermarket experienced for represents We reducing also of most

consider military equipment backlog into XXXX see a entered industry with the disruptions markets. sales that supplier travel Operationally, potential XXXX with of through markets the Fixed date. well. revenue significant to plant time, opportunity In near held the cargo of to convert offset to we have and same record critical operation with and experienced infrastructure, increased long infrastructure, associated cargo challenges a remainder as time term, a military air air over the the XXXX. we At haven't focus transportation contracts on lead the up to and some the

That said, in hasn't and facility zero it with Spain been disruption Mexico. closures

from some challenges AeroTech We are supply having the global our business. pandemic chain on

are has QX. adjustments higher production. to resource operations we to later and While and starting our costs now shipment in in date, result components having this may in make impacted some not This some delays

potential are minimize to operation hard any Our impact. working teams

strong. furloughs demand levels mobile business For schedules work we and for are services, and fixed adjusting equipment where our layoffs remain hours, implementing to in and reducing response necessary production production

in has outlook the less operating Moving supply and food near-term the past critical predictable. FoodTech to for chain, market making disruptions strongly the months JBT FoodTech. Feedback from the our role plays customers over two reinforced but are

shift retail consumption has foods, encountered industry food the First, a packaged the of toward channel staples. demand and proteins and in meaningful

restructurings logistics on pandemic third, spreads. Second, plant operations supply shutdowns due there unscheduled significant and and chain government been there have And are challenges. to

less cannot it's reliable last, customers, particularly increased customer point investment. any right foods, channels protein time, juice the short-term, projects the how same At our so been have we packaged service the in orange and to projects, In consumptions with not For food support, projects. shift we are service-related parts will aftermarket select capacity now active and on to strong. production long trends clear

of have on in while customer and foodservice outcomes. both us to allows channels diverse broad retail base, customers which We are participate global a of more others range capitalize a focused. Many our

Our to significant their chain customer Operationally, or solve operation FoodTech specific not business experienced support plans. supply has and each to challenges is our mission pandemic-related disruption. plant future

team. effort our levels Parma Italy at an facility Our remained incredible has limited running by through

Africa. limited experienced South time in China, and also Brazil shutdowns have We

Last, hours. a based operational variety The from of in actions supply shipping innovating have Similar maintained awaiting To date, is on that we small providing to a support further India our find the to Most to and our remains AeroTech, authorities. and disruption considered to are suppliers. taken is we cost service importantly, essential remote the chain. facility impact impactful currently many food ways to direction an our demand. These which most our restrictions equipment support customers' policy. due including in limitations raw producers, on world's seek enhanced pandemic logistics ability allowing our priority restrictions with negatively and revenue. material and has on-site supplier us customers to to options and effective FoodTech service work an JBT infrastructuring, directly of extending are critical both customers, FoodTech the travel for closed

Looking for exceptional beyond need scale the I engineering changing strong for XXXX, food production will and about production, preferences JBT. opportunities the global Particularly capabilities. our optimistic opportunities relationships, to pursue consumer remain automation for now, with JBT and create and safety customer and

positioned the to automation also AeroTech have We emissions. and from reduced push benefit to

coupled provides higher significant which further of seasoned we our margins by talented with Our proportion workforce team. the bolstered is recurring outlook stability, and enjoyed and management revenue

that, questions. Operator? open to call With the your we'll

Operator

with And Wells from we'll Instructions] our [Operator first Poliniak Allison question, begin Fargo.

Your line open. is now

Allison Poliniak

good Hi morning. guys,

better some First the been on color in up But are I to holding that's assuming bit like aftermarket the you on better what a here? FoodTech FoodTech. give be obviously, going operational than in cadence, side may a that little with be little there's more the particularly with disruptions. or OEM us down Could seeing faring overall we bit it's sequentially suspect aftermarket? you're line

Thomas Giacomini

us. thanks Well, joining for good Allison, morning,

to short-term is maximize opportunity customers mentioned in I'd work to is bit And on my comments, the to You aftermarket and think in as sites, I access we to going access hold effects some impacting the ability the the demand as are the advantage take But we ability moderate it headwind. FoodTech, to should improve. be our there's able here more operational a generally for which up with These we it, term, pandemic aftermarket. our longer as and a say pent-up expect certainly result, recurring our disruptions about start our be facilities of better. prepared correct. a to revenue

there and higher, heading as think a to expect about we customer disruptions And are as should our We remain expect all mix the result, slow aftermarket result the to more at least equipment of of a managing the interruptions, into QX? as facilities. their you color

Allison Poliniak

to in just that automation, demand, out come for are forward? And markets Great. come terms you? more that that this. on recovering then, Any the seeing how is you of starting Are of pent-up Asia from those some region? particularly Any color interest in of

Thomas Giacomini

automation, starts And I our would and life, as obviously, and difficult the has And their around moderate, managing during food making dealing far, And effects it's more that take for supporting customers, that to bit, the all press. it's our a settle of that to to become there be extended shelf JBT we're discussions share a a making customers So brings as much conversation operations, their technologies focused mind is will important. hope start in find number the that production of JBT Allison, been we're advantage very start pandemic those. we'll and that, safety, our sure and on expect customers those our through lot and these impacts, to of times. able the their pandemic ways over with of for on sure them time,

Allison Poliniak

M&A And that it just from? on you Great. on Or transaction of effect permanently walked walked just that color then, might it something revisit? something just the is away last the Any be from. pandemic the away Was going there? you that just you

Thomas Giacomini

Sure.

started certainly should a more it and markets the very revisit process, M&A the more that we the it as return that of due to apparent, we we level, to you lot deal we as a diligence start process includes to moves And understanding pause talked clear normal have reason, very our disciplined as call, get well. it's was a one something Certainly, was the challenged. that on financial the objectives portfolio effects world we So we that financial pandemic look we and be very could fit activity. for would robust Allison, that to which strategic and forward. a And how a thresholds have to And more about that become occur. a us know, better as of and of

Allison Poliniak

you. Thank Right.

Operator

Thank you. De our Larry question And from from next Maria comes William Blair.

open. Your line is

Lawrence De Maria

Good Thanks. morning, everybody.

Thomas Giacomini

Larry. morning, Good

Lawrence De Maria

guess if of most do sake some made few. the a issues. the a you correct actually processing Obviously, processing. that Tyson for of food wrong, secondary Obviously, have be the they're in I here, there further in of expect of lot question. the protein talk has primary, us First announcements. some we're everybody I will And shortages? issues, not

that you out So yet? any with And have is guys? how cancellations you, seen playing

Thomas Giacomini

Sure.

can. on as support particularly as making areas the managing this talked is through on having about. about, our talked best the providing with absolute we've side, is way sure And protein the focus, customers, pandemic their So And significant we JBT our situation. challenges are we've

perspective, start being would restricted that, effects difficulty we seen the because our in our and aftermarket like would on of so And because of we'll seen to vigilant the running to starts aftermarket a delayed completing our access production the focused services, bit as and the impacts supporting about pandemic. we in hope that stepping through projects delayed. to maintaining the customers we to and we time, support we've and quarter; have reengage conversations like frankly, of the see haven't seen but have we're are During of those talked food. from equipment around impacts QX. this way be more industry first their its this quite they our would facilities those, any in level we And And the our expect those the be having up work as able projects customers of cancellations,

Lawrence De Maria

for you'd of point priorities Okay, What be And outcomes of allocation, thank debt down of a you. be you've about paying that debt. in range looking Brian, of pay talked would down? clarification, terms kind in capital

Brian Deck

expect do in in but be and Larry. to quantify debt, lot to all at debt the contract lot income down sheet speaking, that. balance position a all, pay size contribution flow we've we But which deposits customer a would generally cash particularly it's of positive levels the lower various we there's around challenges run to flow. we of the start it cash be hurt year. a to margins. statement. obviously, to year little Right. generally, early Well, expect able will with assumptions said, the some That regarding along this scenarios, just exact And end of do the expect a Thanks, the revenue But with be to of of

Lawrence De Maria

Okay, the I have expected but but you million obviously, also some you think got discretionary guys you right? got restructuring, out you So in working also spending that been of on of thanks. to question, some other last volume. degree proactive million year, And million $X $XX continuing with the reductions, was $XX this

current already ongoing So place you had around expectation that what's this other in the year? restructuring the for

Brian Deck

Thanks, Larry. Yes.

said, you the savings million quarter as plan. about have So restructuring from in $X we the original did

of the terms And to of all like During in revenue savings delay until the those on the those tech course amount utilization, of we are inefficiencies some quarter, started engineering. to recovers. going fair effectively things service productivity see

restructuring As good year. X/X the amount revenue back return things periods, to of into you know, about this XXXX. as were the the a the associated associated savings that we year volume. program below about savings the revenue unfold, for would of $X billion we're on future With And with with being expect predicated

short-term, case the of margins the pretty the holding meantime, cost from not revenue in we in FoodTech, And FoodTech but a mentioned, certainly as taken, quite of given the chance have you an decline up we've temporary remarks, AeroTech on good the larger the in mentioned impact. the in as actions. And prepared the

Lawrence De Maria

one I and If Okay. sneak that could helpful. very more was

sequentially the AeroTech. in moving then being equal, the things all business flattens imply out, so second margins, is quarter should you declined, So right? that margins bottom And the forward, said in XXX-basis-points-plus we

Thomas Giacomini

businesses infrastructure the and from in and clear to as I the pandemic. And how the my world I recover look JBT, to simply revenue want anyone run levels clear, our to about this until XXXX. to But bottom begins the we know the that to in perspective, and difficult Hi of the streams Larry, from normal understand investment see develop start a we us, start and some the would AeroTech, look gave we think travel understand until environment think to to a we in recover understand. more these the it's and and results be long of color. on declaring comfortable And becomes very calling intention would how certainly we better color. better for information understand for forward. world better go us we the starts you information environment the to it understanding then we and to to where clarify particularly as are be don't bottom And some when be or talked as air we we was more we're is more more pandemic to how return provide will

day out. any move markets our point, certainly to much understand more or it's we're And to to play at to normal, to a looking and there's But for things businesses. when return to forward a be the big are early of in say calling too this going recovery how the we JBT bottom very

Lawrence De Maria

Okay, luck. Thanks fair good and enough.

Operator

Liptak ahead. from Please comes And go our question next from Walter Seaport.

open. line is Your

Walter Liptak

numbers those there I for a good customers' our push the to about financing-related for guys. customers wonder I second looked a if with us right. is be but capital, balance working bit. if helpful your all trying and financial get ask out the might if sheet on had I you've review really okay. the I some shape, even uncertainty. wondered That's if The morning, could little numbers to your Good jobs. Thanks guidance quarter of in liquidity wonder for chance

Brian Deck

Walt. Thanks, Right.

that time the projects. receivables, we well the of the on anything they two quality regarding the more I time more handlers, Brian. would they're than time airlines looking CFOs do quality on taking credit areas I in at particularly quality. is the top some of additional our this on side, conversations some personally spent just on reviews at and Yes, would we of as credit are before these decisions on at closely take be and before am we divisional so some focused the make I've ground I looking I've the large say that. So foodservice with keenly making looking at credit normally as spend projects. would more spent sure

we this mention collection would of is receivables. in that. generally stay the And we're to resources of on putting some speaking, environment, see efforts did you incremental ahead typically that slowdown why That

Thomas Giacomini

And I'd little add color, a Walt.

that's aero to And starts a forward in through expect I to and delayed pushed as do in sequential projects more We think to orders start capital talked uncertainty. being our a on equipment we further expect this would there go working investments. with investment normal really return as slowdowns in investment out with relates we'd to level, and about period in of to And And And it capital see some some the food, world customers being to as more improvement that. our do challenges that. some we're equipment. be on we'll way pressure expect that on result, side. we

Walter Liptak

that was costs Or taking on a the or that just structural one for costs? are little level expenses. year, to corporate return the Yes And normal corporate are amount? in percentage expecting was are out cost be a of great. dollar Okay, that operations those of rest One are of that come XXXX? then as sales are bit incremental, couple the the back you more expenses more will What might second when quicker. you those either

Thomas Giacomini

our business. time, approach for certainly, as it, a our sure to want our positioned the the working critical is our our about very can resources, to and looked can adjusting we going I are engineering at because reduce in same trying think that can. health will to To that those but we also do these believe protect cost thoughtful we've we way forward. spending, make generate service the talked people that our the aftermarket, like But want of and new We've JBT best word support involved initiatives broaden the to use sustain recovery labor techs, so our extent company. that, are because that Well, that who our to we key thoughtfully certainly, we been strong we the have opportunities that we at investments Yes. And value of long-term making the adjustments we extent to protect we to about. have thoughtful, the

that said, actions the far markets forward. the moving a sure JBT best kind expenses? we'll ourselves position temporary. as of little have the sort corporate been as of around strong cost color Brian, That understand And getting add to make is how might thus normal, in to the start you themselves the and new a to majority we be we understand want

Brian Deck

Sure.

corporate so, put about reduction could year-over-year generally of in somewhere quarter, the XX% are related per million in you, range the of corporate, $XX XX% would the tell which I cost that about temporary expenses, would expense or of suggest at and actions quarterly to On XX%, or about take. give expense a

Walter Liptak

Thank great. you. Okay,

Operator

from from question comes Mick next our Baird. Thank Dobre you. And

now is open. line Your

Mig Dobre

during go of sequential sure. guess, you. doing to backlog I AeroTech. but My Thank a first have time. hear back you my here kind coming head are first understand well on your comment amount I glad scratching obviously a this QX. I'm And good in into want little you decline, of XX% my the to to bit I'm because I question,

talk some Obviously, we is know be all kind in of deliveries? accepting there is is kind some and be Or can may so what's we of the happening of are about here So is other that may a on, that ones bit backlog this pushed traffic little it folks out way but to getting understand? down here?

But XXX And is very related margin that which basis understand on sequentially, margins imply would decline, employed great. your the this, on to comments down if decremental we being resilient actually volume points to in we I'm it, that of of trying a on expecting this sort basis? the be segment, kind call the go-forward should of if decrementals in XX% understand range level that's

Thomas Giacomini

Mig. Sure,

in we and again, essentially A quite as so position and we we the a that mentioned, guidance about. what in the the standard airlines go us. book quickly. declined the be business roughly ground what So into to are seeing seeing it's in look demand a ship seeing the and decline the equipment, We're tied of not XX%. lot revenues, a to and more as And handlers, more certainly little order significant talked But tends that, a those be said I we're the as breakdown shipped orders of activity. quarter, that mentioned, we expect color. as for and when business, you're very of is we're providing occur in forward, we've to quarter we That's and

kind orders, it, really we more are as seeing the you're about durable fixed think the about between think they as we it interplay what infrastructure-related. And business, the two. of just is you and As there's talked about

the So holding mobile up the equipment result you have quickly demand, decreased getting well. you have as relatively of then and a the fixed

there, is the activity of the in because not piece the of lot The particular we recurring aftermarket there's reduced headwind airlines utilization AeroTech because right of now. the though, and equipment did a the That's airports with revenues, a the on in that other also mention the side.

quicker to than Now come the back equipment, as expect would the begin I right. markets recover, that to

during start you through certainly, talk to piece the more you're in way But quickly. that So, recurring margins? activity, and might little also limited recover Brian, the think a to very little missing revenues. the headwind your expect you we'd that be might as aftermarket that revenue bit period this a of there, about that's a bit

Brian Deck

Sure. the margins. Thanks, Mig. about I'll talk

AeroTech right business. worse. is have its taken has actions a primary the very could reason in to protect They've act XXX-basis-points-plus drop that particularly And you're things the the and mobile been aggressive quick all that base. been to expense So considered in aggressive

So as normally kind so. a margins, result, of would mid-XXs instead like of is or more it XX% decremental contribution you see what

Going forward, I could would way all to down be back be. temporary decline volume, XX%, revenues it tougher. little expect the we'll take And if if have incremental We to on bit Getting would it a from react. right. need actions here depends

So, here. declined an mid-XXs from more of I'm it if from off more assumption here working further

Thomas Giacomini

to be Brian. agree, If challenged, be would I revenues continue the And there. pressure there'll additional

Mig Dobre

side. sense over of that a become the the I that especially well. color. as investment ask Then very unusual question business this CapEx year? very, And obviously, Or discussion folks they to I'm for on reconsidering appreciation sort here some for the that. of with the operating renewed wondering tangible FoodTech obviously, on environment, what are challenges is some of maybe and while their can a get here, they're on years? for operational of had in protein have plans. very how actually is offset beyond, that trying broadly their kind capital do they've a of there the based will environment, degree, great there either effect a Is couple you you sense next Appreciate be That's sort this in as to expenditures to deferred for might of effects But the customers, your more about operations near-term thinking automation

Thomas Giacomini

right conversations businesses, say to customers managing by in enthusiasm I say, those those for and shutdowns, our greatly feature, our through our and service, the when and have given situation, all have a think have our tremendous retail supply absolutely, about would sure happened their the big increased to significantly their consuming and they're but are quickly from there extremely and do at there's customer saying in particular their the tempered Yes vary to mentioned they they talked Mig, less FoodTech be and ability time, are but are providing side, food managing this demand how absorbed shifts, conversations, But there's between significant when portion on will by comments, we the enthusiasm, and would And working of mind for customers to we about that my happening customers' performing. investments the etcetera. not and by they're And I the I share. for an frank feed enable customers just of is many demanded just shifts keeping that current way that that's those now and being making are chain, we in that. have appreciation these as situation.

putting this to automation, above them. support JBT an thing their water, the us they their a committed. challenging heads during to going to There's are to appreciation work to JBT maintain little we about that fact short-term continue be expect forward have speak, is challenges, this great sure long to these projects bit to for that are is and inability future. for and the And manage around forward about of the we are should a And time, looking would business forth and an company. our because this as We're having the extended ability I in support important the relationships run. as through I benefit that going situation, kind we'll pressures on talked so world to returns making more to the to orders these lives, they'd our like also time see be we around things thinking safety, moving their need a we're that equipment food spend customers as normal a to the way bring start about as those shelf of the And customers

Mig Dobre

opportunity is not that the mean, there makes sense. focus perhaps immediately. The I there, is but Yes.

Thomas Giacomini

that's broad at utilization better labor. of of customers, facilities, thinking doing And JBT about we're as continue as the support expectation thinking that's to product we wide about to we're more a when why make company. in things footprint things the to do my in of our thinking investment, throughput, creation do with to value return value very that. support And that is just by very yield, to lot and for we certainly range ability that. a offerings the And we'll Mig. a customers our need secondly, our we and coordinated look their you our a rapidly to global our that about right forward, and is closely they're act, in of participate now normal, benefit in that And create work be customers. interrupted we as process, And certainly, that's level. and some And able increased and And

Mig Dobre

Understood. Last question for you, Brian.

I'm I to wondering, earnings. but Just be positive you year net going back invest as your far thinking on free the going capital hopefully Do that as the working you'd to be based works will your your Thank cash so that the flow? appreciate year And you. free able to flow flow. net it's for comment versus for think cash income cash income. and free how

Thomas Giacomini

Certainly.

Brian Deck

number net to could really Yes. capital think I'm I income be will said, below have a a the I the chance put AR a answer working to EBITDA [indiscernible] X:X. that should up we we intend tricky, be down, be the to of that. with contracts, that amount it's sheet, upon number on dollars, Again, for chance the going is as Frankly, And dependent to going it. That through, difficult scenario decent the but Again, and number there's think, flow still performance. we decent planning because decent year. in a balance planning the for a deposits pin inventory cash do have good

Mig Dobre

Understood. Thanks.

Operator

BMO. question And our Joel from from comes go ahead. Tiss Please next

open. is line Your

Joel Tiss

we questions. sort do the a middle or that being two we XXXX of that? the in bit come sort the questions. equipment about Two XXXX? about from how Like through do this One, have of Good I I used how intensively does hangover of end the think of wonder how just think and morning. little less

Thomas Giacomini

Yes.

priority I and JBT, of interacting. will in that challenges markets making sure believe we making having sure business to there. remains the there benefit to demand as we're catching getting will on essentially accessing relates for customers aftermarket first equipment maintenance, it because benefit up because our and normal return will start that expect, So these our on more to as particularly food Joel, be would I we're the gets sorted The out.

And would be then quickly. there'll that thoughts I hope would our some think more that, come back So around. be

of look start the that be are Where like? and then beverage of Okay, way activity, equipment that take investment and flows support where in there'll the what food and expect the around consumers would its do will to some one needed consumer through. at thoughts longer as

to than you expect stronger slowdown, more would to of during you look and the last normal to expect be what business our So lag to to and it similar would the repeat history, we if itself aftermarket equipment a level activity. business was

Joel Tiss

is in? XX% that recurring revenues? Is unusual normal some that just new situation Or Okay. the rate? Is because that of run we're

Thomas Giacomini

seeing you operational decline XXs. talk would interestingly, right I the you the to possible running the the equipment But that are able activity a feel is having been would we're with is that what probably our mix what realize up now. when obviously tell aftermarket. that buoying would level them challenges that businesses, activity us I we appreciate to aftermarket our And support the of in we've you on also in say of that not or because customers

Joel Tiss

changes talk a Okay, that? and just longer-term bit can and this sense. trends sanitation that some accelerate pandemic? the like because that think because Automation And you about little things happened structural might you that makes of then of last, of

Thomas Giacomini

Right.

automation been that. the rethinking closely the that work So people facility of commentary to so challenges and just see some we around certainly, perspective, the also there's and from JBT's certainly need have for how around increasing

to over So as pandemic that's would reach quick Overtime, to to eases. the and JBT's for bit we convenience so mentioned. aren't time be expert right? customers. demand the the as to do of restaurant implementing more more quite that solve flows for will And paramount, the in service, to important in one look safety make little automation help a we'll activity, of area. required, available. stores Also, there that. It's so technologies way Food our facilities, does, start see many JBT is that would what expect an people expect we us that and balance an improvement, will equilibrium you more our

to food lives doesn't there's then, shelf we increase the the higher too us early start the slower. really the packaged activity. and where that And capacity definitively it. it's the return about, in to on prior and thought a some the which higher will terms to foods talked realize so years, world, of that goods, quantitative projects technologies equipment, to as that have more all for our Those of demand available we've there as remains toll start waste have been able a interesting around few to is strong to little in in be profile see experience around we hopefully speak But have extended to quality normal

take And really as we've making we that our discussed, positioning through to and time. good taking of we're just during JBT as this of really, customers we're sure advantage that this transition care

Joel Tiss

you. Thank great. Okay,

Operator

from America. comes our Bank from question Andrew of And next Obin

Andrew Obin

I for safe information. hope staying the is all everybody

on chain. a Just question the supply

sort the rethinking sort you aftermath of, certain the regions? I thinking in chain And the of the just to Just follow-up Joel's supply I Are we're you trade about you in what that guess shutdowns? guess, seeing, constraints. maybe on highlighted of consolidating question. some consolidating, generally shutdowns led war? Are

held better reliability Also, have up would terms which under of love regions others these of supply hear the chain in to circumstances. than

Thomas Giacomini

Yes.

a given our of been So I'm have and for Italy chain Certainly, JBT, pretty of, as a we lot but huge seen China. for don't Not it there's there. there. technology for critical in fortunately, And nature Mexico countries, of we of we to lot some relates but our supply a lot then the is primarily robust great intermittent the China the some supply currently, we European stay has facilities There's concerning. the operations, concerns through been good of some industries particularly a to of challenges. our source operational have in been able issue which out the appreciative of from reduction equipment share support, chain, flow a people, very lion's out in comes work

a are The so logistics on And costs, chain. challenges right? we part to our some manage forward, overall, both and availability we've also big but far, able of been through going supply way see that,

air increasing, see more do look and chain are of freight, you'll And our you you meaningful. company. supply have we've need the we forward, regional, always it constraints thought supply better probably that being of us costs if chain Transportation to are as as because protect

So move between have regional assurance, we'll to look the and sources levels sources higher making and low-cost we sure flexibility have of balance that. that that to

but our there's and be say margins, to could terms it result in far, of a head not make good just headwinds a all we been pretty work be done in mentioned sure hasn't there, we've our that trajectory. of terms materially, there I'd continue as to on completed. of we've also So that we done And working so revenues But we're as job that. forward,

Andrew Obin

in about should talk we of seasonal just XXXX? follow-up cash shifted to just cash of bit the of Can cash a given just sort that the toward of anything being flow has unusual because second was ended your up you delayed of cover aware one free be an otherwise had on little of year, companies free expect you being with quarter this second would quite issue nature perspective, from also And half. sort flow; phenomenon the seasonality than a a weaker flow, we of bit deposits

Brian Deck

And negative as our frankly, is incentive from compensation pay you quarter Sure. half prior inventory Generally the as typically, speaking, typically off better front build then is start the year. than future back first the quarters. for half. you to And our

as activity cash flow a pretty was on new I'll So short of actually, the QX, news, actually go QX get of pressured be a positive level to, equipment. we in the on expectations more having it, under bit little generally good deposits call a flow the while particularly could of circumstances.

front to I the said, would than be half. better half bit expect a back still the That little

Andrew Obin

it's a But unusual to what it like pattern. be annual that just saying, you going are sounds not normal from

Brian Deck

that our and bit a quite things the around with caveat are Not is moving limited. visibility particularly. Obviously,

next how visibility say this have some going much is I are better so unfold So quarter. surety very that next with in time we'll over the much things quarter; to

Andrew Obin

No, can I Thank so that. much. you appreciate

Brian Deck

you. Thank

Operator

the And the the you. time. concludes closing call in Giacomini remarks. back Thank turn this I'll for queue questions to that at Mr. Tom

Thomas Giacomini

that importantly, most time. this dedication members call, we and like to forth end tremendous challenging I this the our during and to JBT support our callers As has customers company team been recognize thank effort our by would put and

Operator

ladies much, This gentlemen today. us our and for very concludes you call. joining Thank

You may now disconnect.

JBT Marel (JBTM) 3 May 202020 Q1 Earnings call transcript