Release Date: October 23, 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) achieved double-digit year-over-year revenue growth of 12.4% in the third quarter of 2024.
- The company reported a significant increase in adjusted EBITDA, up 23% year-over-year, with a margin improvement of 160 basis points.
- Strong order growth was observed, with a 10% increase from the prior year, driven by recovery in the global poultry market and healthy demand in pet food, fruits, vegetables, and pharma markets.
- The Automated Guided Vehicle (AGV) business is performing exceptionally well, with revenue expected to exceed $150 million and growth over 30% this year.
- JBT secured favorable financing commitments for the Marel merger, with a Term Loan B offering that was more than three times oversubscribed, indicating strong market confidence.
Negative Points
- JBT expects to incur approximately $30 million in noncash pretax charges in the fourth quarter due to settling outstanding obligations of its pension plan.
- The company anticipates further noncash pretax charges of approximately $145 million in the first quarter of 2025 related to pension plan settlements.
- Certain consumer packaged goods (CPG) areas, such as beverages, showed pockets of weakness in demand.
- The merger with Marel is still pending regulatory approvals, with the timeline to close expected by the end of 2024, which could pose integration risks.
- Despite improvements, the poultry market has not yet fully recovered to pre-pandemic levels, indicating ongoing challenges in this sector.
Q & A Highlights
Q: Can you provide an update on the size and margins of the Automated Guided Vehicle (AGV) business?
A: Brian Deck, CEO: The AGV business is expected to generate over $150 million in revenue this year, with growth exceeding 30%. In terms of margins, AGV is performing above JBT's overall guidance range of 17% to 17.5%, aiming for over 20% this year.
Q: How do you see the AGV business evolving in the next two to three years, and are there cross-selling opportunities with Marel?
A: Brian Deck, CEO: The AGV business has potential in warehouse automation, particularly with CPG and pet food customers. The Wenger acquisition offers cross-selling opportunities, especially in pet food. The business is well-positioned for growth in traditional CPG and pet food markets.
Q: What is driving the recovery in the poultry market, and how sustainable is it into 2025?
A: Brian Deck, CEO: The poultry market is improving due to pent-up demand and deferred investments. We see consistent improvement and have a good pipeline. The recovery is expected to continue into 2025, with visibility for 18 to 24 months. Customers remain profitable, supporting ongoing recovery.
Q: Can you discuss the regulatory process for the Marel merger and any remaining approvals needed?
A: Brian Deck, CEO: We are in the final stages with the European Commission, expecting approval after a 25-day review period. Australia is the only other jurisdiction pending, and we anticipate approvals by the end of November. The merger timeline remains on track for the end of 2024.
Q: What are your expectations for synergy targets post-Marel acquisition, and is there potential for upward revision?
A: Brian Deck, CEO: We are confident in achieving $125 million in synergies. While we have identified opportunities, we will reassess once the businesses are combined. Margin improvements are also expected from poultry market recovery and Marel's internal efforts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
