Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- John Bean Technologies Corp (JBT, Financial) experienced a strong recovery in orders from North American poultry producers, contributing to the second-best quarter in terms of orders for their food technology segment.
- The automated material handling business (AGV) rebounded nicely in the second quarter, contributing positively to the company's performance.
- JBT's second quarter gross profit margins improved by 120 basis points year-over-year, reaching 35.6%, due to restructuring actions and supply chain initiatives.
- The company expects AGV to contribute an additional 2% to JBT's total revenue growth for 2024, reflecting improvements in manufacturing efficiency and lead time.
- JBT's updated guidance suggests a steeper quarterly progression in the back half of the year, with expectations of double-digit year-over-year revenue growth in each quarter and sequential margin improvements.
Negative Points
- JBT's second quarter financial performance fell short of expectations due to a revenue shortfall, primarily from book and ship orders, customer delivery scheduling, and a system upgrade issue.
- Revenue for the second quarter declined 6% year-over-year, impacted by a $4 million negative effect from foreign exchange translation.
- Adjusted EBITDA declined 11% year-over-year, as benefits from restructuring and supply chain initiatives were offset by lower volume.
- The beverage industry did not meet expectations, and the high cost of capital remains a headwind, particularly among smaller customers.
- The Asia Pacific region experienced disappointing performance with elongated order conversion cycles, impacting overall results.
Q & A Highlights
Q: Can you comment on the system issues in Q2 and the impact on revenue? Will the revenue be recovered in Q3 or stretch into Q4?
A: The system issues and customer-related delays resulted in a $15 million revenue shift from Q2 to Q3. We expect to recover most of this in Q3. Despite some market weaknesses, we see strength in areas like AGV, which has led us to increase guidance for that segment.
Q: How are orders progressing in Q3, and what is the outlook for backlog progression through the year?
A: Orders are strong in Q3, with a $90 million higher backlog conversion expected compared to last year. While backlog will deplete due to high revenue, we anticipate strong orders in the back half, particularly in North American poultry, which is still recovering.
Q: Can you provide more detail on the poultry market's current status compared to pre-COVID levels?
A: In North America, poultry demand is still 15% to 20% below pre-COVID levels. We are seeing recovery, but there is still significant room for growth.
Q: Are margins expected to improve year-over-year in the upcoming quarters?
A: Yes, margins are expected to improve year-over-year in both Q3 and Q4. This is driven by higher volume, improved manufacturing efficiency, and favorable mix, particularly in poultry and AGV segments.
Q: What is the status of regulatory filings related to the Marel acquisition, and how are you engaging with Marel investors?
A: Regulatory filings vary by jurisdiction, with formal submissions in most areas. We have engaged extensively with Marel investors, including retail investors, through meetings and a webcast, and have received positive feedback on the merger's industrial logic.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
