John Bean Technologies(US:JBT)2020-10-29 06:58Financial Data and Key Metrics Changes - JBT posted net income of $17.2 million and diluted earnings per share from continuing operations of $0.54, with adjusted EPS at $0.83 and adjusted EBITDA at $59.7 million in Q3 2020 [17][18] - Free cash flow for the third quarter was $53 million, with net debt declining by $42 million to $548 million, and total liquidity standing at $448 million [18] - Adjusted earnings and EBITDA declined sequentially as some short-term cost actions moderated as expected [17] Business Line Data and Key Metrics Changes - FoodTech revenue declined less than 1% sequentially, outperforming the forecasted 10% to 12% contraction, with operating margins at 12.6% and adjusted EBITDA margins at 18.1% [12][13] - AeroTech revenue increased 9% sequentially, with operating margins impacted by $1.9 million in inventory write-offs, and adjusted EBITDA margins expanded by 150 basis points [14] Market Data and Key Metrics Changes - North America saw a rebound in quick service restaurant (QSR) drive-through business, contributing significantly to order gains, while Latin America remained soft [24] - Asia showed strengthening as expected, while Europe improved but not at the anticipated pace, and Latin America continued to struggle [24][61] Company Strategy and Development Direction - JBT is focused on enhancing customer priorities such as food safety, yield efficiency, and automation in food production, with a strong emphasis on digital experience and customer interaction [28][29] - The company is transitioning from an equipment supplier to a solutions partner, looking to invest in technologies that support customer needs [33][90] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery, noting that while access to customers has improved, the ongoing COVID-19 pandemic remains a risk [32] - The outlook for AeroTech suggests that the bottom has been reached, with expectations for organic growth in 2021, particularly in infrastructure projects [36][40] Other Important Information - The company recorded exit costs of $9 million in Q3 related to manufacturing capacity rationalizations, with expected incremental savings of approximately $5 million in 2021 [16] - JBT's M&A strategy remains active, with a focus on targets that meet financial and strategic criteria, although there is no urgency to complete deals [89][90] Q&A Session Summary Question: Outlook for AeroTech in 2021 - Management believes AeroTech has seen the bottom in customer activity and engagement, with solid infrastructure projects expected in 2021 [36][40] Question: FoodTech's QSR performance - The QSR trend is strong due to increased demand for portioning and automation, with expectations for continued orders in the fourth quarter [42][45] Question: Free cash flow and inventory management - Free cash flow was strong due to improved inventory management and a focus on cash flow, with expectations for slightly positive free cash flow in Q4 [80][81] Question: Pricing environment and M&A outlook - There has been pricing pressure in the market, but the company remains disciplined in its M&A strategy, focusing on strategic acquisitions without urgency [88][89]