JBT - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to JBT Corporation's Third Quarter 2020 Earnings Conference Call. My name is Laura and I will be your conference operator today. [Operator Instructions]. I would now like to turn the call over to JBT's Vice President of Investor Relations, Megan Rattigan, to begin today's conference. Ma'am, please go ahead.

Megan Rattigan

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

like the I'd over to Now Brian. to turn call

Brian Deck

an and good JBT and leader a Megan, CEO, customer without our profitability. who culture, cannot start established former relationships, fitness deep operational within fostered strategy and saying and and the a elevated Tom growth Giacomini. Thanks employee our that and inspirational everyone. words industry. reputation He was accelerated about morning, transformed few He and I mentor JBT's friend,

up few competitive Tom's JBT's legacy I Chairman, to Now it the Alan honor JBT and I enhanced continue has a best Alan to across us is our performance. that share -- strategy customer and words. to orientation position, Alan? best of rest Feldman, the

Alan Feldman

morning Brian, you Thanks good to on and of all the call.

by about start Tom Giacomini. echoing comments me Brian's heartfelt Let

the quickly. is well Having leadership a CEO are that deeply to that, and by process know, his sad Over to the complete important has past Tom moving you our select X years, the to board all Brian confidence keep for JBT the and in said passing. had developed great we respect moving for forward. and team It's Deck entire board permanent underway search

through to year for challenging close a these name thanking JBT times. and support end. Our you I'll say by in is hope your continued by CEO

Now third Matt report. Brian Brian? cover will quarter and our

Brian Deck

to outpacing quarter double-digit expectations expectations. terms P&L order pickup exceeded Alan. from we FoodTech captured plants and with the Thank the factor and outperformance quarter both in sequential share. standpoint. our flow our improved Moreover, at third in in a customers, A access mind you, key JBT's cash of was

pipeline the QX Of pleased very it quarter, to recovery improving backlog But solid active risk received into orders effects we encouraging. traditional the period is of note, on While the of is the translation too will pronounce into state the economy. the the quarter timing pandemic a continued the of the affect are early given seasonality. our of restate coming fourth the and orders with

call previously analysis the quarter Meister experience of CFO brings manufacturing performance. provide global extensive CFO Protein of Division third Matt? role. over Matt interim Let to to financial leadership and me to in the operational our Matt turn served and as our

Matthew Meister

Brian. Thanks,

period mention the reflects months. revenue Before let JBT's organic I significant had quarter, over to as declined third on me X% that we than provide all contraction. XX% outpacing past XX% our no XX FoodTech sequentially, forecasted less completed performance acquisitions details the

relates we While the confronting products. to the from center especially of equipment guidance demand customers, on revenue perform it side, the equipment to retail our well, as continued recurring of for production exceeded predominantly store

provided XX.X% line We with to of call. also access FoodTech guidance our improved on customers' at service due expected margins quarter's a margins to operating were in completed faster XX.X% last pace installations than and of facilities. adjusted projects the and we EBITDA

equipment lower realized which our than revenue, higher generally margins expected streams. service we and than mentioned, recurring As contribute

were team's improving margins in exceeded Additionally, of associated of of adjusted AeroTech response to increased EBITDA was reduction X% X% continued cost to just customer basis AeroTech's to margins efforts Operating cost expanded points. to focus with write-offs expense the This moderated up the impacted on our million sequentially, $X.X sequentially guidance XXX Spain sequentially SG primarily operations. above by the X.X% inventory engagement. rationalization manufacturing controls. revenue due expectations, as our X%.

AeroTech's ability EBITDA million better-than-expected, million a Corporate little pleased double-digit of after in adjusting are management a came We costs. activity. for to of margins, in maintain with expense considering $XX.X airline sharp customer $X.X decline succession

Now announced manufacturing regarding the previously capacity rationalizations.

these third operations the X total, capacity in EPS third our the process short-term cost at incremental AeroTech of diluted downsized. significantly in million of During facility exit Adjusted we Adjusted quarter, in adjusted and earnings the $X plants. the quarter, to and was savings $XXX,XXX in Also anticipate realize the and JBT EBITDA quarter. of per quarter, of of $X.XX. In told, we declined as rationalizing All expect In operations was of restructuring million million to third posted costs approximately in continuing from $XX.X Spain $XX.X quarter additional share $X.XX sequentially $X million expected. fourth quarter. we million with savings the and in the cost efforts. recorded income EBITDA and manufacturing million XXXX at earnings as some associated were of the expect moderated actions began charges $X fourth in net FoodTech $X

in and AeroTech As expanded Brian quarter. and stated, Sequentially, order orders XX% FoodTech remain We trends front. the on were flow XX%, cash encouraging the disciplined respectively.

on strong $XX With to and deleverage able flow, of improved as our from Third receivables deposits, resulted cash million free well outstanding been we've sheet. at declined XXXX. through continued customer efforts quarter and collecting $XXX X end million million of of cash as our first performance. the inventory balance the quarters quarter million flow $XXX at stood quarter. At $XX liquidity the debt the million, third Total proactive $XXX net third in

Our end X.Xx at of X.Xx. low of X.Xx, to bank the is range stood target which leverage our at ratio

in than At we of EBITDA quarter, margins X% quarter X% XX% FoodTech adjusted are typical range. and basis. third FoodTech, in anticipate operating within to a improvement. XX% expected to we do to sequentially in seasonal to to With expect to fourth the fourth XX% ahead a XX% on not Margins orders Looking of sequential increase anticipated revenue timing a and the quarter. shipments the better margins improve

AeroTech flow quarter. not the into season, to decline shorter in we fourth X% a a Due to On shipments sequential the expect will side, X% deicer revenue.

Additionally, despite largely XX%, XXXX. to to approximately have extraordinary investments Operating XX% range. adjusted airfreight be are delayed end-market be profit demand, in into EBITDA capital expected XX% cargo while margin margins customers should shipping

to For and expect quarter, in be succession we and costs. $XX let management corporate $X call me quarter the million, million about $XX million which anticipate $X.XX at to back million Brian. at fourth rate $X.X expense With expense depreciation. turn That $X the puts of tax fourth guidance approximately and we approximately to $X.XX. M&A XX%. to should restructuring, for that, million includes and the Interest earnings pension million Separately, $X.XX EPS guidance a $X.XX share of per to our in $X adjusted

Brian Deck

Thanks, Matt.

me Let quarter third on we opportunities in trends and the plan we saw forward. elaborate to going the capture

and strengthened North activity as customer Geographically, America of FoodTech pace Over pipeline remains has it's at Europe, order was patterns about improved In we third the Asia improved, to the propelled of order the quite not we active gains soft. has our continued quarter third America. customer quarter, last talked to while activity expected. has What anticipated. -- Latin improve. quarter the course improve

into COVID from sustained last restrictions trend. business a service benefiting XXXX. suggest and in and well jurisdiction caution eat-at-home restaurant Consumer outbreaks, with rebound the full this Specifically, restaurants, JBT quick will on recent is service drive-through especially

customers trend creates addressing product JBT's opportunity offering. needs. capacity now a in of of Our and broad this runway support immediate for are product and investing This

safe convenient an high As friendly provides and consumer tray demand meals. retail business, which is individually benefiting example, for sandwiches our ready produce, from Proseal environmentally and sealing equipment, packaged

on the We fronts. are also mobilize service to well and able prepared and installation

JBT access successful creative and work teams. support the the building that intelligence our to at strategy we're serve digital important, with in Digital and critical Assistance. resourcefulness capabilities we Information said, life to our customers support installations experience especially JBT customers access to and partnerships and further Team PRoSIGHT dedication in multiple best. way acknowledgments and received priorities. every of service the the These relationship customer In quarter. we've has the Officer. The where with Augmented customers we nearly of combined As throughout advantage frontline our enable and discussed particularly and eased customer we this local priority. elevated this, of its of been the interact our facilities brand alternate I'm we to our with and announced proud this front, strengthened remote Remote in our development intelligence regard, deepen of customer iOPS, and Kristina the organization have emphasizing including we we into Paschall monitoring, brand our promotion today support Further company service on gratifying. and examples tools move, saw as continued Chief We service solutions with installation cycle. other of the leadership JBT, solutions. technical interaction in from Executive the JBT of JBT Equally are this automation With using equipment of the the controls demonstrate product integration And took as across enhanced

Beyond trend, environmental increasing improving efficiency, on food our priorities: is yield eat-at-home our in safety, and customer customer FoodTech impact interaction costs. lowering reducing efforts labor and and investing focused and

are customers The quarter, discussed having automation beginning translate to the need quarters. intermediate more discussions labor density the several are as with the food strategic about particularly last reduction of these As around come are we expected next priorities imperative. we the an over in with production optimistic for orders remains to we

passenger same in don't is XX% which pandemic. customer At roughly you to the in and AeroTech infrastructure this direct know, AeroTech, Regarding the at as remain airport sales of remains minimal roughly sales see handlers, orders work getting XX% ground accounted solid very to for suddenly and XXXX. this authorities from for pre-COVID, we this strong the worse. with time, collapsed segment With airlines expected to of XXXX time,

open and JBT and protocols we any operations. communicate cautious Currently, and COVID workforce remain Operationally, suppliers are customers. to a remain impact able we the including on own within enthusiastic the we we trends based the to commensurate the to world's new remains growth the heavily customers, we worsening our of us our risk with manage our development activity. to continue the with general. pandemic, diligent trace positions But actively to notable of accelerate speaking, military On level have access Broadly within we in manage market beyond. about will XXXX expect and of while invested improved, structure that where with air that business AeroTech side, cost customers And XXXX. very customers, for continue business opportunities has remain that side, for all safety potential JBT in we as the implications on plants in the the in economy and globe our are in throughout on to product cases. And conversations and serve the open cargo

Finally, targets continue strong leverage meet do have advance M&A flexibility competitive the strategy. strategic flow, to we JBT's and and appropriate cash that regarding our position. pursue criteria financial JBT's With and liquidity to and financial

And relationships from an use support that We opportunities on metal continue supplier equipment innovation, proprietary to as anticipate so, resources. a to organic our customers' solutions in acquisition looking whether to that box will precious And JBT partner. we world's through better make cultivate continues beyond or are focused lead we're the Notably, the of evolution future we doing transactions. priorities. its

been JBT the call customer has to dedication face the to service remarkable. safe thank Operator? in all team to open exceptional many I'd With of maintaining operations, I challenges like Before members. questions,

Operator

question first [Operator Lawrence William our Blair. Instructions]. from Maria And comes of De

Lawrence De Maria

wanted next you flat there and in equal, and of year, top challenged. the that that messaging degree cargo Of into getting growth year? mentioned still check, and was worse, for of macro was at is change bottom growth obviously course, for that not negative that's positive line in major AeroTech some hit being 'XX, some condolences infrastructure, the environment, growth Is organic next passenger that the a just it and is passing. to bottom deepest et not signals signals least et least I bottom cetera, hit safe path and Tom's say to to AeroTech solid our Obviously, to things out cetera. the so EBITDA positive that all outlook resistance

Brian Deck

Yes.

seasonal in relates as in terms of strong the activity So to XXXX with for AeroTech, and bottom Keep it was QX QX customer worst I seen is engagement some there. and think we've AeroTech. our the see of financials to And mind, quarter. improvement that very starting typically definitely

is kind effect there from carryover I'll a of So that first a call quarter. it seasonal of there, effect strong bit and a

the will will if the entirety of in So quarter that first things at versus you of start solid. we even precisely bit see infrastructure it's looking we're cycle call pace replacement is the it's drag on But do XXXX happen of to for a The good XXXX. mentioned, on replacement us, we there. going lot I pretty little mentioned XXXX. side out considering as I bridges. going its little solid. longer to bit keeping There's are still why projects at know term, -- projects a not the compare how still That's first that of XXXX quarter early lots the that into to XXXX of And

the source lot really actually better-than-expected Beyond quarter, still see. airports. the well, infrastructure better-than-expected actually the actually -- the improvement. of third the to that, a services need airports need that in doing there And quarter. we'll side services the services performance in still primary was That on was we're of But which is side, the

side, There's a to pretty be generally of out the are I that things On mentioned, programs we good. military looking participating lot there as are going in.

we've in several know, for the you been last years. investing R&D As

And the some of next of going couple those fruition start to things to years. for come are to

So XXXX. not going over-focused be on I'm totally to

we're to part longer in do term, -- have to start over airlines other segments. of manage. think manage the meantime, in the intermediate when that really for the going revenue we're think we we continue things can I the really from term, diversified positioned And spending. the well we stream this customer nice other the the And do

Lawrence De Maria

your ask business et is eating agnostic are fairly long Historically, thought and cetera, to where a eat, to diets, people people as FoodTech. right, And we as bit I of about more want as changing little positive.

you quite et first and much the that's I primary if where that's Tyson, you flowing the a more primary is then direct if the about to hearing QSR JBS, is is curious to cetera, side, I'm Proseal is was second side. as is And don't I that more play packaging curious but the on kind money that occurring part what the processing around on directly are So the which why bit curious doing of investing automation. well. I Or QSR side, why guys? see get guys. impact side, part changes on

that's if curious automation to else? somebody are just or able capture of I'm next So you're focused that those this in factors wave on safety if

Brian Deck

in really is -- was that Yes, we that heat different nice the strength Sure. a areas to participate of third couple up. in trend order actually and And QSR starting do quarter. in that the

or foods, the is automation up in what do which Specifically, in we we cooking, that portioning -- QSRs, QSRs batter things do them on not go equipment. they're as our we also then They're an all ate breading or into the the frying all a ultimately store. battering factories cetera, few of bakeries, for the because well heating them doing however and frozen they're and et play, that -- do bread the -- for as and we

all been So type call we call a that's what further activity. the those, really strong it, processing push I'll as

the So there. that's strength been

the automation see play. primary -- we the as certainly as -- the prime I'll some CAT we play it, to equipment play marginally business, our every well is the the business. On going benefits primary in side on first And in side, automation of side, our from call

all processing, I further after of of will the and lot primal scanning, mentioned. play automation, the we on and which is but the is cuts, a we line then things packaging, the some in processing already is of see ultimately secondary So that x-ray which some then the down that, once portioning

a and we would early. we -- already and quarter the frankly, But continue the expect into fourth to are through side So improve to might orders, to participate bit we see that little starting XXXX. be primary will

Lawrence De Maria

Okay.

It's not capital you it's So like. going of directly flowing the sounds a to function the guys. only -- primary primary guys, to the it also

Brian Deck

a in and the between I player is especially primary secondary bridge the that strong secondary in further. No, which which We're of process. operations, kind mentioned, really

Operator

question Robert Mig of Dobre W. & Our is Baird next Company.

Joseph Grabowski

passing. We wanted sorry just Joe guys make in of that. very for to can know I sure Tom's Grabowski to this is This hear also were Mig morning. all you

Brian Deck

Thank you.

Joseph Grabowski

questions, I guidance QX on at worse prior of than of Larry's guess, about a pretty decline even though XX% maybe XQ. implies little the kind with were a starting two the quarters maybe solid building orders the FoodTech the midpoint, in in

that maybe So orders about of going impacted for in XQ? the that flow XQ talk kind how and -- guidance that how you how through saw are to your

Brian Deck

demand, X X%, One, things to pickup. sequential say would seeing of quarter fourth a scheduled a happen. quarter and some There's of we $XX couple to our the pushed imperatives we're customers maybe typical seasonality. been -- we XX-ish, see deliver earlier there's we and X% from systems fourth Yes. than Instead, really since affecting pent-up million things had quarter I would got in kind XX% got the expected XX%, for and with Normally, some about that the so. or had we third stuff in,

-- otherwise about our what obviously So significantly X would exceeded the have points guided we about revenue call about in third quarter. Because I'll we that of expected. would

So it some in a backlog doesn't right, really into quarter, function back The pushed third the is the hit quarter. backlog, the -- little backlog. it's bit and of in fourth if earlier gets a the

So of the it. that's part first

our translate off for takes of accelerated July, second The X and relatively the part a lead September. and installations. et X, times, solid it the started and in is, orders into to August weak given typically shipments order it on FoodTech equipment then into front it cetera, quarter actually the month And months

the would into all XXXX to told, obviously the did pushing the from issue. we was COVID improving as But of seasonal that of that quarter. pace is in see the below would that remains we're ultimately and with is of kind that enthused But did of concerns eat-at-home my We'd the development at back is is that is the have to compared a and customer we But some to store of still to making shake mid-level out expect out. play, get around customers kind of That a of full I we'll to and to strong that little a a what the what's continue. quarter said, our the level, we're in the getting our pipeline. some that quarter. to finally nice on the going strong and dedication like quarter means second the Hopefully, we conversions that's pipeline. really bit of more The consumer improvement below said, And It's quarter. are recovery. really going there. missing of window At And important But to normal play how continue. third what demand just do of are we I'm what going an QSR, see I need know what I center thing level, some it's continue a those trends be the still is where improve third to about out. that's right? say think some kind areas, So investments pattern. activity -- that a

I'm along the play with about. quarter. and beyond, on we how the focused are overly setting on that is What that ourselves we talked automation not for really I'm XXXX up focused impact So fourth of

Joseph Grabowski

implies then -- touched and fourth and I in I'm the XX% and I quarter bouncing my you then second the on below know this in XX% quarter. little of sorry, the second midpoint the the midpoint the a question been below the in decremental bit, upon kind XX% quarter briefly the of I've would the guidance in around margins. And quarter, in third follow-up FoodTech prepared remarks. guess, XX% be

decrementals talk the So about a maybe little what's just in bit FoodTech. been driving

Brian Deck

Yes.

because actions actions. the Going quarter of in you've of quarter from some those little tricky cost to quarter, the and the some one cost another third is making short-term short-term return of bit a noise got

cost a in engagements, decrementals were volume, the creep back which given we the the which yes, are in So good is cetera. but to some savings, low, that's of as lot starting QX in decline that see of short-term really customer increased that et

one in contribution or in FoodTech high-XXs thinking you is kind another cost So the should I past, talked And way margins. of of then quarter, basis contribution kind specific basis. a the instead year-to-date to or absent a or full better of generally investments be at look savings. specific looking on of it more low-XXs quarter and year the as AeroTech at kind about about it think any the And margins, the we've

Operator

Todd is of Brooks King question next C.L. & Our from Associates

Todd Brooks

add give in to recurring both like passing. as the for that mix condolences of us of I'd FoodTech detail maybe each nonrecurring talk any nature And and my can revenues those about the you and Tom's well there the of on AeroTech quarter streams? Is to in

Matthew Meister

Matt, is This Todd. Yes.

JBT up For XX%, recurring of point QX and up QX from was which revenue up and is in year about in -- of last XX% for about all X from about QX. percentage

which specifically, year, quarter, is and XX% again sequentially QX. about this from XX%, recurring year for X is recurring revenue which FoodTech revenue up AeroTech, flat QX. point about approximately from but up is XX% from in XX% from sequentially past last was slightly And down QX last about For

Brian Deck

a bit more mix otherwise and color the equipment we what lower the know, then little you expected expectations, that X% as the our margin margins. we contribution more in general in of recurring things was revenue within which And and -- had bit of -- on revenue little to margins might a in EBITDA put that on that. But FoodTech have the is lower given XX.X% than -- the provides -- product side. side, service on And tends third basically excess on we aftermarket the exceed quarter. one that, towards wouldn't saw the skewed to actually of the carry installations, XX% And contribution or guidance much was to say I in

that low the XX% for us combined quarter. things those of all third EBITDA of in kind range held So

Todd Brooks

your is the a entry obviously, of the were thoughts is is more a life. just exit North on pipeline but bit quarter in about it placing orders stronger-than-expected question, fragility, guess thoughts bit flaring signs as quarter you that initial into qualitatively, actually when some the -- quarter, And the what qualitative did just talked September America, on. Europe, little again, the coming access, in maybe for and how your and look maybe versus focus customers open But at you a wondering goes and third pandemic sequentially then, I things as if customer talking this through you're getting you? that then more FoodTech, -- on July to versus fragile feel I'm orders, as far you as up

Brian Deck

does Yes. It see.

seems need get So July. North like is going. We orders in driver strong. this And demand the here started people definitely in then it I was mentioned, strong, weak quarter. really strength kind got going the projects really of of stuff off the demand order and as conviction mid-August, isn't And in quarter to the retail about, the away, okay, is QSR these going America

through kind shift patterns I say So continue it quarter. And fourth will a quarter. in was into that notable would midway the of hopefully, the

to pretty and -- as the about the Europe a good the -- little outperformance in was quarter, the we -- not And talking drivers at actually third quite one then America. say side, when in that anticipated. the we in Europe, of quarter I quarter. pace the did the North other did of ahead expected bit. that little the America actually in we conversions improve I'm say hand, at bit a would North revenue on the from quarter second depleted of weren't it a revenue would orders Europe had from third quite we the entered to And on I but but it of some we pace perspective, Specifically main was backlog we

of of see that bit was a improve in hoping the some flare-ups new is think COVID-related. that little curve little these, of ahead some I'll Europe. So terms economies call a we're in bit. to We certain of Europe in it,

a as but the it to just And our good. improved a XX%, be expected. little Asia specific It's little particularly little COVID revenue, at then their not of seem has they with environment is smaller, improving, basically so, just there, a we're recovering, cautious And pretty bit bit bit pace. quite essentially it's is in but China faster is XX%

America that decent terms struggling like And to side. Latin looks still it's the seems of just in recovery really shaping. So in their on be economy

Operator

Mr. your Baumann, opened. is line

Patrick Baumann

Can you me? hear

Brian Deck

Yes.

Now we can.

Patrick Baumann

I'm done all being sorry. a bit sometimes little Yes. It choppy. rightly and over

good my with with condolences questions. our just I taking [indiscernible] start give Thanks So passing. morning. for And the

to news. his best. his terrible Just want I and wish he family -- family the

Brian Deck

you. Thank

Patrick Baumann

cargo. Can about et [indiscernible] you've and and business XX% you mix handlers, pasture and kind air of in I and this air about the talk the in think cetera. year [indiscernible] it's And arena, pressure, the of you said XX% got of

kind to those percentage XXXX mix, each like were into areas? what and to at of heading kind does exposed this the in it reset look of of business of year of you look If that terms

Brian Deck

in XX% XX%, market. that XX%. of declines cargo, Sure. like XX%, is more in XX% even I can or Infrastructure is on in air like more kind tell that and you, travel maybe based military approaching the it's passenger

Patrick Baumann

in then orders, they the of are And seen terms any getting that's that the for to pressure, right like orders close you Or X? now? piece are

Brian Deck

an piece quarter. have in gotten think for airlines, third of one order Domestically might for we the equipment I

get do on some deicers loaders. of China some we for specifically some equipment and However, Asia, out orders

point. at defer. will any money just not airlines spending the they're So Obviously, this

getting with we side the do services We airport business -- are them services -- on side.

orders coming but work still So would say, say, with started them at in below start exited because And The we airlines just et It's pleased. are most don't cetera, on the of our as so the that hopefully see the airport in of fourth that pace much I still And specifically. very we well. those itself, services the the quarter, is not weak, We do sometimes quarter airport airports much normal as to authorities, way but disappointing. slightly I we're lights the see normal we to would really with of of air with maintenance a you parts get for slightly I know, some dependent some business cetera, vaccine. just on, as is where in to improve, going a et that's XXXX. keep Ideally, pace, be is we return through, the themselves. kind travel. profitability upon this improvement of the airlines, But the

pace we investments. on and profitability So of and their that airlines means what know the for just don't improvement their

kind like be but that -- what landscape as that's looks of remains So the to I today. but here seen, sit

Patrick Baumann

clarify, passenger sales then XX% like Yes. the I to just that's and air XX% that this mentioning zero. with service so that's business. sustainable, Yes, in just -- the going XX% or travel There that's year, part parts is to of that -- there. area you're some right? pressure that you mean, the Makes And sense. the of

Brian Deck

yes, like to that's -- exactly. otherwise just equipment. would Because XX% Yes, down right, that's gone with it have

Patrick Baumann

Okay.

So of you're some there And in year comp a could the part the but the seeing next year pressure because so, guess, little in there's of first I from be just first the equipment there, maybe? there quarter.

Brian Deck

correct. That's

Patrick Baumann

Okay.

Brian Deck

That's correct.

Patrick Baumann

make to numbers got right Just sure, the I wanted on.

U.S.? mentioning you demand and times of North orders FoodTech, -- trends labor but Then couple in So well, imagine, it as you're in those from strengthening automation. on America. you've like are I hearing the around customers mentioned you're some mentioned appreciate more you sounds on What outside a North QSR that America that. seeing for I'd

the Just curious U.S.? outside

Brian Deck

is outside. the it's in strong Europe. It -- The Europe just as a as U.S. It's similar not source not trend as Yes. similar. It is prevalent in as it is in food QSR is a

type Freezing the canning center other and is pretty So it's equipment. store. of the sterilization bit a little about more supporting strong, the stores,

outside the strong is good some -- trend is of as out U.S., good in of quite the activity strong QSR doing we're North but and activity not getting but Asia is Europe, some QSR out Asia particularly America. So

Patrick Baumann

And side? about within demand -- for that's -- like protein the when in food that's business those and liquid you're the more than your areas, that's talking

Brian Deck

more the it's side, on QSR the On business. protein

the a of more sterilization canning On their business, the it's food bit and the towards side, skewed center businesses. liquid store little

Patrick Baumann

sides then in Any in business notable of seeing your two differences you're trends FoodTech? those

Brian Deck

more They in is say it's if quarter, so shape, low. a bit want they And last disappointed accelerated a specific, certainly -- recall, quarter into came little QX. it where third up V been kind stable foods faster going quarter of more -- protein I quicker. a then really protein from faster liquid second you from down QX QX. is In little than close went the to They And slight orders from improvement has foods just don't with and more liquid were pretty but faster call, to to QX the stable. of third the bit

Operator

[Operator Instructions].

is question of next Andrew from of Bank Our America. Obin

Unidentified Analyst

deepest It's for And condolences Obin. Andrew Emily Tom. Yes. to my on it's

Just a question on free cash flow.

And released cash good Was So free management? inventory or on flow? I this quarter follow-up, cash a flow that takes lot improving function very And strong. was free think puts inventory sequentially. then, and a just of as fourth a was of demand quarter any

Brian Deck

Yes.

being hyper-focused that cash very the inventory, on inventory in in the of saw flow QX. think making lower seeing that the they of cognizant out businesses we're been and being improvement investment we I since has coming given are volume actually predominantly the -- QX

we've positive, just focus in be stocks of it have a QX. order inventory, I and flow. lot in which be flow, it that that be our around would not think it slightly has there I put the as contract the improves inventory businesses lot because I on Obviously, forward, open demand will maybe lot gotten effort is tighter on going a free in progress past, and even expect as the to positive, to overall And to will but say in see teams and for with QX, the I have So somewhat for seen and has would our orders in seen cash inventory improve we Because into I reviewing their continue like because sheet POs the cash smarter about QX a as think QX it side. what past. balance we're safety expectations orders mentioned, investment a than demand, been improved seeing, And great our will moderated think will gotten management, that, we extent the we've the free management purchases. have and not to improved business. improve more our the

-- confident the cash year, slightly positive should pretty hit be end flow to expect about conversion the positive, of free we we're so, And at and that XXX%. of we

Unidentified Analyst

And then question from business FoodTech I today? automation to you revenue that potential XXXX? size to And on equipment. in automation food tailwind food is just large had a opportunity How way there any is the for market or

Brian Deck

of -- tricky solid quite to invest the market we anywhere will going be two-thirds and really do, of is you of factory. And definition about automation, continue significant broad. potential in in regards, arguably of size particularly when within question, we think market. the pretty change food It's what pace the could of Sure. because the The a of where kind areas. those is dictate many that That's some there's half, is considered automation a it, labor from

I it's many sit think to market, area in our But and And growth have the and cetera, I'm needs And it us and et years, these of identify then to the them design their it's and large, but good market, that frankly, that the product size enough I that across is billion not to think size specifically meeting a then for them helping definition, of about quite by things. will difficult. in to our frankly, here more to it about the So the we're automated about not take support a lines, because one able where labor-intensive for and them years. particularly an from even think showing let I and business of participate is I product but converting those offering. JBT and starts identifying market, of than it several that I And think where that. offering customers, that going things don't large percent $X say, participate stops we are x business -- has it's serving

think on I bullish positioned. just that, particularly and we're mentioned, as I well So we're

Operator

question next Our from Lawrence De Maria Blair. of William

Lawrence De Maria

had of flow free couple for the conversion Thanks a I just number. cash follow-ups.

clarify, adjusted is to income Just or income? net net a that

Brian Deck

Regular net income.

Lawrence De Maria

net Regular income.

Okay.

stable, the thinking -- like a fairly next inflationary M&A and/or a but still active. reasonable it bit Secondly, you goes? of pricing regular is just Can outlook, I going see talk into year? about you're sounds spreads been least still environment? we're secondly, there X questions. urgency of it's level? the [indiscernible] And work kind about assume, at Is it Or at how or an pricing in and progress

Brian Deck

our raw or inputs you do Sure. pricing? our mean pricing, you material mean do say When you actual on

Lawrence De Maria

actual net your pricing achieved? on mean, and pricing I

Brian Deck

there's Actually, might pressure good et pricing cetera. fighting for with as Yes. everybody this you year, expect, orders,

see little taken our So has pricing of But pressure. without to bit margins. that. pinpoint specifically there Certainly, been a we It's argue off can and hard that. you that's question,

second In question of right? -- side, the terms M&A on was

Lawrence De Maria

ask Yes, it sounds you an there a are and Is kind in urgency, like of I while. spreads, did a deal you haven't guys active. done

kind to overall the there's actually if deal Just a to there. how out environment of is curious be and conclude stuff done

Brian Deck

-- earnings their starting consider be EBITDA important which we're to Yes. the all people There primary certainly have particularly part is in. our any we'll in when ROIC, and view is the are and of going And urgency, to where to little kind look better to metric settle not Well, in of obviously, that the improving market it are bit strategy, of things starting of us, a disciplined. is but we're we terms at our are acquisitions.

included that to end The earnings were was really up know first hard of kind half is really to the year, year. where for going of because the your difficult what's

have that I frothy. from some more visibility, pretty is moderated [indiscernible] to side to price discovery starting little the been expectations think because because year So a starts get get we're as a bit I think ago,

think I'll getting on been side, we're -- here some recognition the economy predictable there's sits call some today. it, buyer think the I and I a more, predictability into think some So there's moderation. And that I where

terms JBT cultivate continue In relationships. of to some specifically, of we proprietary do these

strategic we're to it starting relates very see our as got, some continue suit then is into, type again, call to from businesses and in more where that are these focus. provide help technologies But to We I'll to that us well. customers specific beyond we've bankers a books acquisitions, support, which line non-equipment as solutions. provide investing investment that And full better going plan software service, it,

to So a but no urgency, willingness do acquisitions. certainly

Operator

remarks. And we for call I Mr. like would turn closing questions. no have the to Brian back Deck to further

Brian Deck

will questions. be Thank for all joining you us Megan as always, any available if this you morning. everyone. have And day, follow-up Good

Operator

conference today's participating, you Thank for you now concludes this call. gentlemen, and may disconnect. and Ladies

JBT Marel (JBTM) 29 Oct 202020 Q3 Earnings call transcript