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John Bean Technologies(JBT) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - JBT reported a strong first quarter with a year-over-year revenue growth of 1% in FoodTech and a decline of 28% in AeroTech [9][11] - Adjusted diluted earnings per share from continuing operations were $0.90, while GAAP EPS was $0.84 [11] - Free cash flow significantly exceeded expectations at $78 million, improving the bank leverage ratio to 1.9x and increasing overall liquidity to $496 million [12][13] Business Line Data and Key Metrics Changes - FoodTech experienced a 22% year-over-year growth in orders, with operating margins of 13.3% and adjusted EBITDA margins of 18.7% [9][10] - AeroTech's operating margins were 9.3% with adjusted EBITDA margins of 10.7%, exceeding expectations due to favorable equipment mix and good cost control [10] - The company raised its full-year revenue growth guidance for FoodTech to 9% to 11%, up from 5% to 8% [14] Market Data and Key Metrics Changes - North America and Asia Pacific regions showed strong demand, while South America improved significantly, and Europe remained volatile [19] - FoodTech orders reached a record $386 million, driven by increased demand from food processors [18] Company Strategy and Development Direction - JBT is focusing on strategic acquisitions to enhance FoodTech's competitive position and is actively evaluating opportunities in equipment and service capabilities [25] - The company aims to address supply chain challenges and inflationary pressures while maintaining a strong commercial activity in FoodTech [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a meaningful sequential ramp in performance through the next three quarters despite ongoing operational challenges [8] - The company anticipates that inflationary pressures and supply chain constraints will continue to impact margins, leading to a slight reduction in margin guidance [14][13] Other Important Information - The company expects to invest in inventory to support sales growth in both FoodTech and AeroTech in the upcoming quarters [44] - Labor market tightness is affecting costs, particularly in the U.S., which is being accounted for in the company's guidance [71] Q&A Session Summary Question: Insights on FoodTech orders and customer concentration - Management noted broad-based strength across customer segments, with notable demand in poultry, meat alternatives, and seafood [29][30] Question: Trends in new capacity and product development - The increase in capacity is primarily driven by customer needs to meet retail and quick-service restaurant demands [32] Question: Sustainability of current order levels - Management indicated that recent orders reflect pent-up demand rather than restocking, with a baseline order run rate expected to be around $340 to $350 million per quarter [36] Question: M&A strategy and deal size - The company is considering both larger and smaller deals, focusing on enhancing capabilities in food processing and packaging [39] Question: Impact of inflation on margins - Management acknowledged inflationary pressures affecting margins, with expectations for pricing adjustments to offset these costs [68] Question: Labor market conditions - The labor market is tight, impacting both direct labor and professional roles, which is reflected in the company's cost structure [71]