John Bean Technologies(US:JBT)2022-10-27 19:07Financial Data and Key Metrics Changes - JBT posted a year-over-year revenue growth of 16% in Q3 2022, with GAAP earnings per share of $1.07 compared to $0.91 in the prior year, and adjusted EPS of $1.27 versus $1.02 [10][15] - Operating cash flow for the year-to-date was $75 million, while free cash flow was $13 million, impacted by lower customer deposits and elevated inventory levels [15][16] - The net leverage ratio was 3.4x, expected to improve to approximately 3x by year-end due to improved profitability and lower debt [17] Business Line Data and Key Metrics Changes - FoodTech revenue increased by 11% year-over-year, with adjusted EBITDA margins of 19.3%, reflecting a 60 basis points improvement year-over-year [10][11] - AeroTech revenue grew by 32%, with adjusted EBITDA margins of 8.2%, although margins fell short of guidance due to input cost inflation and supply chain constraints [12][13] Market Data and Key Metrics Changes - FoodTech orders decreased by 9% year-over-year to $349 million, impacted by a negative $21 million from foreign exchange and softness in European demand [11] - AeroTech orders were $113 million, reflecting a decline year-over-year due to the timing of large projects, but the pipeline for infrastructure projects remains strong [13] Company Strategy and Development Direction - The company is focused on managing its cost structure, including a modest restructuring charge in Europe and tightening discretionary spending globally [8] - JBT aims to enhance its competitive position through acquisitions, having completed the acquisition of Bevcorp, which is expected to contribute positively to margins [31][32] - The company is committed to supporting customers' sustainability goals through innovative solutions that reduce environmental impact [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding macroeconomic uncertainties but remains optimistic about FoodTech's position due to stable demand in the food and beverage sector [7][23] - The backlog across FoodTech and AeroTech is nearly $1 billion, embedding better price-cost dynamics, with expectations for continued growth in 2023 [24][26] Other Important Information - The company anticipates a negative foreign exchange impact of approximately $85 million on revenue for the full year, affecting EBITDA and EPS [18] - For Q4 2022, JBT expects FoodTech revenue growth of 18% to 19.75%, and AeroTech revenue growth of 23.5% to 25.5% [19][20] Q&A Session Summary Question: Free cash flow conversion expectations for 2023 - Management indicated that a conversion above 100% of net income is a fair expectation for 2023, despite lower cash flow conversion in 2022 due to increased CapEx [37] Question: Deleveraging strategy and M&A outlook - Management confirmed a focus on reducing leverage to the target range of 2x to 3x, with M&A taking a backseat in the near term to prioritize debt reduction [38][42] Question: North American customer demand and order delays - Management noted that customers are currently experiencing decision-making delays but expressed confidence in a strong pipeline of opportunities and ongoing customer engagement [44][46] Question: Digital strategy engagement and commercial opportunities - Management reported positive engagement with customers regarding the OmniBlu digital strategy, with several contracts signed that are expected to generate revenue next year [50] Question: Lead times in FoodTech business - Management stated that lead times have extended from 6-9 months to 9-12 months, consistent with the overall marketplace [60]