JBT - Earnings call transcript Q3 2021

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Operator

Good morning, and welcome to JBT Corporation Third Quarter 2021 Earnings Conference Call. My name is Maddie, 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 Vice President of Corporate Development and Investor Relations, Kedric Meredith to begin today’s conference.

Kedric Meredith

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

you and presentation, our In of encourage Investor third actual it, found I Relations to can the projected analysis provide current Finally, quarter review results. performance, the call in website. we which including earnings section a our of between be bridge

turn Brian. call I’ll the to over Now,

Brian Deck

Kedric, morning, good and Thanks, everyone.

hurt JBT enjoy While at shortages bottom the equipment. specifically and the quarter, materials, inflation chain our and labor our are to FoodTech unprecedented disruptions, our deliver to on and across in confluence build components challenges AeroTech, business demand recovery of critical ability and the associated with path supply particularly shortages AeroTech to labor firmly robust line third of continued pressure impeded at performance and top

have and shortages production business the costs and labor were unavailability was more aftermarket and growth the successful tempered of labor of costs While our delivery FoodTech environment, Across and parts that and at impact the more experienced which metal Board, current line and top extended absorbing impact logistics we the installation efficiency. times, pronounced, rising skyrocketed. lead

to delivery, supply we’re to parts. and actions alternative order lead sources working offset time taking with been pressures, have secure We specifically, these identify for earlier, visibility, all increase suppliers operational

continue We have FoodTech higher costs. and across increases AeroTech pursue will and implemented to possible increases to offset were price

abreast keep these their affect communicating we’re to constantly customers our of orders. Additionally, them how with might challenges

labor challenges, their which disruptions, installation. similar our customers delivery and as can supply facing well delay chain are also own as Our

day-to-day long-term operations their This delivering customer as We’re the remaining building talk flexible I’ll about by environment of uptime responding is promise. optimizing minutes. as part equipment. in demand by supporting brand customers a an of more important partnerships and great and our JBT’s on productivity possible few and existing

will Matt detailed third provide quarter and the the updated more you results guidance First, through of analysis year. walk for

Matt Meister

third with a Brian. Thanks, quarter line XX.X% was in FoodTech, and million Starting year-over-year $XXX revenue with guidance. increase

ability EBITDA year ahead While the last that EBIT belong our the margins Brian that mitigate manufacturing. period, challenges and chain adjusted limiting of prior guidance the we the outlined margins impact provided At right of on equipment, slightly to now. business increasing we significant cost of XX.X% operating reducing with we the believe the ship inflationary and were supply some efficiency, to and business, AeroTech, had are experiencing were impacts margins more The and a below of the the reflect XX.X% others of quarter. of ability

sales As terms pricing take to and adjustments time contract have the that means discussed, more longer realize. previously we cycle customer

$XX challenged adjusted Earnings expectations. situated EPS the our million. expectations additionally $X.XX X.X% $XXX far in well of with up with was better than flat which handle fluctuations, for XX% in improved also costs EBITDA of to million, typically more rate with EPS quarter, Corporate year current normal came is and adjusted GAAP restructuring third than the expense, margins third of our incentive of M&A EBITDA While was to variable short margins Consequently, versus slightly EBIT came revenue cost was and business third the last and adjusted tax including less AeroTech $X.XX. of short effective up X.X%. year-over-year quarter AeroTech guidance. In interest is well X% to and and lower primary were adjusted our due given expected the extremes. AeroTech total, margins quarter compensation, EPS

$XX Third the representing continue flow rate side, was quarter XXX%. million free healthy conversion on benefit expect through XXX%. flow be of to September, cash performance. cash flow, for the With FoodTech orders which cash at remain contributions the of above and excludes we free million, year, Year-to-date flow customer XXX%, pension $XX to deposits – our cash strong conversion full

supply to have X% that earnings from from XX% into forecasting At growth, of exchange FoodTech, a foreign full XX% results third year now revised continued revenue XXXX growth as XX.X% we have approximately chain and organic breaks of in and acquisitions. to and down we lowered year-over-year X% we Given X% quarter the expectations expectations XX.X% slightly to labor are X% guidance. challenges, our to

We margins are At to XX.XX% XX%. full EBITDA expectations. FoodTech projecting segment have XX.XX% and of to significantly more XX% year our revised operating of margins quarters adjusted we AeroTech,

year to X.XX%. cost XXXX. approximately X.X% down X% with sales interest of from to about EBITDA revenue about for with Corporate margins full – XXXX We and operating to X.XX% million. the of are full X.XX% year of be And are to AeroTech’s X.XX% eight be expense now for adjusted of $X projecting margins expected

to brings full adjusted. $X.XX $X.XX Our and basis guidance earnings XXXX on share rate for full as GAAP XX.X%. the year year estimate at tax $X.XX a to per $X.XX to That

Now, to Brian. let call the me back turn

Brian Deck

Thanks, Matt.

businesses. with up the commercial rival second orders of Year-to-date, quarter on are improve, from nearly for at a do of the orders robust across the continue markets quarter XX% million across beat demand our robust America food Geographically, FoodTech stated it recovery up almost In of organically. and remains side. of retail easier commercial travel third activity COVID and service serving Europe, environment North I call, basis, work. easing and JBT On service our is while orders XX% record restrictions are making FoodTech. some robust FoodTech $XXX As FoodTech were to the a most orders continued customers to expectations. top year-over-year enjoying

related activity challenge. COVID a although order also travel Asia, We remain there restrictions improved experienced in

In as orders store well center pet terms markets, plant-based strength for end At the $XXX the enjoying AeroTech, premium of particular foods dairy, million, of quarter food in of we year-over-year. as are FoodTech’s poultry, XX% up and products.

sequentially healthy down markets and the met second our for expectations incremental improvement business a serving commercial and conditions defense reflected very it which from infrastructure, orders, and included few quarter, airlines. large While the from cargo

Automatic that favorable order material as packing that demand. less Within FoodTech, solutions our are handling tremendous output customer systems, and about enjoying robotic automates de-corers, and with Vehicles case are all water-jet DSI and At interest processing, automation these produce anything harvester trends, particularly excited automated we in labor. increased Guided such portioners

to to automated differentiator On end that mobile side, in for and generating Across needs businesses, energy our become docking reduce strong environmentally consumption and has the fixed to water address solutions. sustainable equipment we food products AeroTech continue a customers both a critical customers’ food this At market friendly develop FoodTech, for with industry. waste, working more hand we’re competitive in interest. support hand

vehicles at are accessible These a back example, electrified this our new reduce our bridges environmentally JBT’s excitement reduces customer which as source as plastic electrified introduced GST allows by intense fastest pressure [indiscernible] provides generated airports. sustainability passenger recent utilizing Including at reduce We’ve friendly lot Earlier solutions readily also an to our usage power which of new while power. share, cargo introduced of solutions to food AeroTech a one As growing usage waste. push that industry three better diesel tractors, customers packaging boarding cutting airport XX% month, advanced show businesses, of and an aircraft XX% deployment emissions. goals. of loaders solution that under

understand to to Of course, performance XXXX. that know how we this might all you want in translate

guidance call, comment a the year key drivers. following few While the we do fourth not provide quarter on for I’ll until

on by side, backlog. All were in XXXX pre-COVID well continue see we XX% basis, growth record schedules, for are a food expected in shipment near well growth are ahead anticipate due the to double FoodTech AeroTech in we FoodTech. the in and revenue low up systems. the all, secular orders of XXXX trailing revenue demand is year, environment. of of the in reflecting delivery four expansion Based part also order XXXX. backlog the orders with for digit On record challenges a levels but our improving the that benefits commercial set the as in backlog mid range to AeroTech’s strong – recovery current FoodTech and demand above attractive at And On all quarter and level. an above XXXX teen

at supply prices the primary of labor least risk looks albeit higher As constraints. margins like at first XXXX. half. chain equation should operating difficult leverage, comps chain supply At around in The this remain with ability reflect and realize will point the our progresses revolves capture and it first of XXXX through the the to present, AeroTech half tough

even our JBT platform. continues employer choice. not side, to quarter XXXX inclusive yield intelligence labor uptime plan With as resources year. is more On strategy use iOPS in investment as the partner. to on furthering What real further ourselves cultivating position we preventative expected the our water energy connecting efficient digital provide get about safety quality. machines an a environment to into By enable to and and are our focus an and better and it, we maintenance, time fourth tighter it’s regarding of next we improve advantage preferred certain to and work monitoring likely ease equipment and in digitally, food accelerate the machine believe JBT and solutions can systems its and reinforce competitive can enable in of

to half digital service. frictionless so, at to a do more aim customer about interface first detail our and uptime system of we’re Investor of in fully Day JBT also To and the a support plan providing We by experience. XXXX, We point, enabled delivery provide which digitally host enhanced our parts strategy. we’ll customers’ order building

the steps to like thank that, have With challenging in customers I’d to environment. employees Finally, our questions. Operator? extraordinary let’s turn satisfy an to your call taken this all

Operator

first Yes, comes sir. question Instructions] your And from Liptak with of the Walt Research. [Operator Seaport line

Brian Deck

Hi, Walt.

Walt Liptak

yes, guess, with bit good labor a the did. seems than are having quarter supply AeroTech little to well in Hi, as And there’s versus things Hi, that And you’re as things AeroTech chain in you better chain going issues, the wonder my question how about problems FoodTech I look FoodTech. supply – talk first are bit I with thanks. And more FoodTech. versus that does getting congratulations, why could a through AeroTech? you is, I’m little more the if problems inflation guys. the be morning And

Brian Deck

Yes. challenges supply side. Walt. labor experiencing Certainly, FoodTech are and Thanks, and chain Sure. side AeroTech both on the

between differences businesses. there However, the are

worth probably diversified. less mentioning production is First, that is AeroTech’s

major factories XX across diversified about As America, the you FoodTech whereas – across operate of more in factories North two world. know, out we really may is

do much We there’s a higher As see et limits constraints the constrained. result restrictions, labor the well market overtime, and particularly is a one is challenge facilities of as use overtime upward COVID more to having labor of how cetera, use. as that, absenteeism can of but you just and tight more to because

a sold, where do are on see now, the FoodTech, nearly things product and that a as metal So more ago of costs a in more concentration $X,XXX goods labor The some also percentage And AeroTech of a relies to know, relative from the things there tight you cost line. seen more as as diverse $XXX like which of things. go ton constrained consider you of really, was that XX cost constraint steel diversification total in fabrications, And AeroTech. lines for metal when as And to particularly of nine, about we’ve PLCs. really you AeroTech right concentrated that, the months product quarter. are for Similarly, is than production ton. because well lack of electronics, higher you AeroTech’s is as real know, FoodTech, really then a are other

well. that will impact an as creates So inflation

all So at with three chain inflation and we did kind labor of supply get AeroTech. hit

that’s So that if main reason, the helps.

Walt Liptak

Okay. Yes, that. Thank for you that does.

FoodTech while. impact AeroTech, has, to those, you with it less trend – we than And to supply the Does like labor you do as for XXXX us backlog. so do and we I’m sounds the a easier, but continues ship not chain think into say be going going think the that are get that issues, inflation

Brian Deck

the it nothing because FoodTech Certainly, this our customers. word, the to side, That engineer environment. given on have configure capability pricing easy way more said, order with to Yes. easy order, the in is works not right does is

to cost So little real more we price. of a can do matching bit time

are just So see because still fourth pull constrained. continue. back given we margins little that FoodTech, the bit to environment, they the revenue a little down should be a quarter FoodTech in able for and did to the the bit We

So things. grand the but we pretty did make some adjustments minimal of there, in scheme

we then certainly the And given. into the improvements, not more and conversation. some through challenges likely on the as leverage, pull down and they reprice do As the first AeroTech fourth which price continue some second the you contracts that the significantly did also into get you of will of the operating whole they guidance, their to and think We saw but quarter, start the from quarter quarter. would in constrain only their backlog, cost see on

Walt Liptak

Thanks, good right. rest year. All Okay. with of luck the the

Brian Deck

Thanks.

Operator

Your comes with next of Obin from Bank line America. question Andrew of

David Ridley-Lane

Obin. is David This morning. Andrew Good on Ridley-Lane for

Brian Deck

morning. Good

David Ridley-Lane

you’re there? the with developing in customers here how sort having what XXXX. But some good environment FoodTech conversations budget. you around of and The you’re the It’s having of clearly that tone conversations are see early do of XXXX a

Brian Deck

is Yes, the solid. pipeline

beyond I our pipeline tell you So the as we pretty we visibility can today, solid. into in it’s that what’s sit And do backlog. have here

are retail the side, meaning facing customers challenges demand. on Our

retail you’ve a to a lot see of shelves, If you store been frankly. lately, empty

we do still generally of up, environment. the to there’s hard – been. to precisely, as seem year, it next in we keep the conversations, up. be demand and can side We sit a has be see the for nature as to amount So going service full demand do cycle. then point good the fair the environment we say food to picks demand where here the what’s It’s a good as And a of today but

David Ridley-Lane

you positive have. and automated commentary And vehicles then other the the systems guided automatic heard around

is strong talking plus how for very growth we today FoodTech orders large overall automated that the is strong some Just say, inside for orders average like then you you’re demand. when Are business FoodTech. we solutions? seeing – growth? XX% of And pretty Are background, these for

Brian Deck

Right.

of mentioned north automation. think all So on of things cost we and has sell of JBT a of other kind it’s savings portfolio I when about those XX% of pure We our our broad productivity plus for solutions, of automated obviously as customers. automation. We some within portfolio. that for our beyond yield, sell in portfolio our you is XX% pretty terms But on whole type sell

of growth for it the of north you the, it be So call rates, for business. kind wouldn’t average, XX% but whole baseline it, would of if kind I’ll will, be the

Matt Meister

of probably vehicle guided automated is X% business small the business, range overall that or AGV FoodTech the relatively revenue. percentage then And in of

Brian Deck

that. of JBT

David Ridley-Lane

you Thank very much.

Brian Deck

Sure.

Operator

Instructions] [Operator

Brian Deck

we the we the go a in and certainly chain AeroTech labor I’ll wait quarter incremental some and but challenges new a really our of we we on questions. of which time, back, us. see stepping so, and really inflation I on look last in in it’s Yes. here, and any on good productivity quality challenges at for seen. the And a our that. while business name the the investments we’ll just And helps these customers know, we very comments automation back we’ve the electrification, marketplace. get the our year through tough the we’ve the customers other provide and made of the is sustainability work side, take that step product difficult for on a side within through or been and supply frankly, the the over and for AeroTech helped that the quality development It’s

a is now, them tough or seeing we year good the really AeroTech. look over but forward do to so. about time feel the of It we next prospects So right improve

Operator

have up Liptak Seaport lined with And a we do Walt Research. question

Walt Liptak

others. thanks. a couple I’ll Hi, asking try

front you’ve FoodTech installations sequence it very year high. the on lot mean, next side? the of a looks Is I is What’s is like booked. got It So it the of first At start the And the the end spread of into year? was funnel throughout mentioned year? is point, you to it Or you loaded XXXX. the booking half solid. what backlog do

Brian Deck

supply some the on equipment for maybe six FoodTech further, out in three we’re lead bit a Yes. of Walt, right to given that little the times that seeing. our months, backlog, constraints pushing chain now

the end loaded. the So sort now, is I say, of on backlog right front would

of and We of decent will first backlog. the to into point, FoodTech our throughout get year in do half booked a amount more book-to-bill we QX into your the have business But XXXX. of

Matt Meister

typically given the patterns. stronger back the we building do said, But half our require kind continued that That experience does normal backlog. also of obviously some seasonality seasonal with of just normal

an this months been you Walt, would real kind the in margins that few and us last this installed the and know marketplace throughout guys our I as if this aftermarket then and a this really process recurring revenue thing is that backlog equipment little excites strong our few throughout our are a it you down into over mention can’t we entire the that’s quite of strength and revenue other The and revenue year me COVID There’s have quarter post-COVID. continuing model on great all We held of about base grow you up strength last the in over is we been of margins, very – strength a into of of for if deployment underlying customers. that and really of in that proud and of recurring for that and quarters, capture actually, is recurring next dig the support creates base of that see have. so in source for

Walt Liptak

great. Okay,

with in Just you kind of some was third commented quarter the this can your push of I does of or installations, us help if customers. staying because that, in on revenue that some ship slipped, and issues fourth quarter idea yes, into does that revenue the wonder quantify shipments there you’ve that XXXX? labor of it

Brian Deck

Right.

$XX of the revenue quarter shifting got range then million that into first fourth should million have in a some is somewhere pronounced fairly quarter was and now – that otherwise shift what revenue you’ve it that’s to in then going to that side, quarter. the AeroTech of been the $XX On

that understand fourth said, as guidance under of the this pull we kind So next the year. sitting quarter for of constraints as And and we’re well, of did quarter the is record we why I a into near to AeroTech. down move that first some going we’re that’s on knowing backlog

Some constraints, that and well remarks our and delays the partially AeroTech that, the us their up in growth to set a and is on of mid-teens delays mentioned shipment constraints of does for customers supply year. I of because next our partially but as double-digit it labor on prepared it kind

well-positioned. we’re on just pleased think best, our that thing customers. of They’re feel makes for I products. GSE we’ve the opportunity And the me And quality really doing that really the work the with show they’re had we pleased I had and meet So and pretty the our investment of as to larger some of a mentioned, them. I been recently,

in is sure our well-positioned AeroTech need cost price price of So and from effectuate through here. on our increases then backlog, really some get some issues just contracts. annual We to these make we

Walt Liptak

Okay. All right.

delays So the largely it sounds like shipment AeroTech is on side…

Brian Deck

a to think out turns not, in. the appropriately in actually Aftermarket kind we expectations. some equipment conservative on quarter we expected think of the than FoodTech. it and in I hit FoodTech, – we’re on lower kind as constraints, we hoping given upside, for were right came positioned but third outperform bit of I parts I we did little came was Frankly,

Walt Liptak

Okay.

the for about question, final is a – M&A? are M&A one are you valuations just okay? future thinking for it And looking, the last is me. What looking how Maybe Okay.

Brian Deck

Yes. a more proprietary it pipeline. of pipeline a we’ll hard be work our we the done the lot a otherwise, JBT revenue private a robust in the pipeline amount a secular And sit here space you recurring all but rapid, know, It’s some deals. we on terms in high. have about Hopefully, the year. perspective. environment of cycle pricing position model, given where end of to we the perspective attractive have – investment these we really competition as deals. But it’s And from good all equity pretty and these to like on is by It in things one pretty is full. get our general a of an the is thesis in is there – that and do is a FoodTech for

So to the to customers. lots automation our about to continue of provide ability like there’s

JBT real so to attractive I value globalize into great network there. some we it And And really have but is technology see and businesses proposition think we that’s a do good fold an these for that space. out in the

then type day-to-day go So closer there’s order past, in opportunity we the like we’re add our customers also our of mentioned would of just investments what investing lots some the in are their things to to holes meaning of not where in investing within as the OpEx on to CapEx, And on path preventing I’ve down offering. in product areas but get them where call OpEx spending operations. the

big from the is strategy of perspective. that the M&A part an So

Walt Liptak

Got it. Okay.

Good luck Thank with that. Okay. you.

Brian Deck

Thank you.

Operator

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

Brian Deck

Mig. Hey,

Amy Teske

is all. morning. Hi, This Mig Amy this Teske on for

Brian Deck

Hi, Amy.

Amy Teske

like. going question play coming to at the can been expect in a And conversations how Are final with customers passage that that to is seeing down pipeline you a in final are coming and acceleration infrastructure all bill how final about you orders? more what lead in orders Just going the look bill is about that do uncertainty – a your bill in? out bill to has on, lot that AeroTech,

Brian Deck

out right, we infrastructure bit is, little point, it’s a certainly out take would from earmarks hopeful longer infrastructure cycle our for for this you are it haven’t that in tailwind obviously that is this the of tailwinds would at would bill work given because stands several I infrastructure. business. nice some be But here. is of time coming There very business it point, a no yet billion that dollars it our will tell that where forecast, it wherever That Right. – airport conversations passed. considered to it and At be us. gets

in a XXXX to see do and we if in XXXX. we lead more revenue So would conversations would passage, – likely that

Amy Teske

you. Thank All right.

Operator

with JP Morgan. Patrick comes Baumann M. question line from Next the of

Patrick M. Baumann

Hi, morning. good

Brian Deck

Good morning.

Patrick M. Baumann

How are you?

Brian Deck

Good

Patrick M. Baumann

my question. taking for Thanks

some comments these know of half Just being though year the of quarter. third plagued fourth on quarter first next for challenge that you into a and made issues I some

to of sit Do margin AeroTech, you now, the type year? and performance what on can back maybe the think of where Or curious full in you a here you’ll get of of but you visibility that growth were front like what just revenue you margin expect kind back you bit, growth, you assuming to would XXXX? do kind today see revenue think challenged what’s least on could kind get that As helpful. to you you expand little to deliver that at kind on you be level, for should any have color we directionally be based of

Brian Deck

at third Sure. and first into into I see the what would expansion and full margin the which levels, I and quarter, be not It’s given – some or quarter fourth we quarter. the kind early XXXX that – better quarter we in a the will then of so. was comps year XXXX the or continuing too we about see tell fourth Pat, little whether for exit possibly as of bit XX% to the say second quarter

should levels. We’ll think XXXX next at the on be pace both right. well however we margins, of months of in the lot and I to the we we that to more know a through contribute And should year does year. which we exit prepare year. the course so get over approach improved more it So side, into XXX order a could do need the go guidance for that, operating that volume as We certainly as next or much leverage. as the do be three XXXX that

combination supply a price So leverage, of it’s operating cost, chain, improvement.

what up for real does to of is us And really XXXX? in how a half the as the So I second set question the me think it’s pace – year is that nice XXXX?

Patrick M. Baumann

Got it.

Okay.

levels, be expect mouth, improvement half just That’ll should should margin some too some expect to XXXX the I we an it sounds early want we So in but maybe to driven back to in like extent, on maybe of second put annual But not in your year. the don’t but tell. I words basis.

Brian Deck

pace year. we some year on of Certainly end and what’s are of improvement as improvement The Yes. kind the where the this we and kind improvement. where questions up goes of

Patrick M. Baumann

missed maybe Right. helpful? that put thank helpful And color, Just this, – that might on some comments guess, digit? that any you we line then the you. strong parameters And have already You – I them does translate? that’s it that. for strong, on be have pretty to next some is side, top parameters the of FoodTech parameters year. then still continued how made kind – environment around orders could some digit be Can a around Is it, would I double-digit? mentioned increase, be curious that of kind Is high-single it single on

Matt Meister

sort customer think growth We the FoodTech probably the expect have Yes. do of maybe see don’t XXXX specific I pipeline to but projects. quarter growth kind is for revenue our digits digit revenue as We where given expectations for around and be where of high-single of will yet, XXXX. where backlog is in low-double in we this exit

Patrick M. Baumann

time best guys, color. and of Once appreciate great again, Really luck.

Brian Deck

Great. Thank you.

Operator

are no Deck? there questions Instructions] time. [Operator at Mr. And this

Brian Deck

will Great. available questions. any be us Kedric you have follow-up morning. all if you all – for for this joining Thank

Operator

for This Thank conference concludes you today’s participating. call.

disconnect. may You now

JBT Marel (JBTM) 28 Oct 212021 Q3 Earnings call transcript