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John Bean Technologies CORP (JBT)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 revenue of $392.3M (+1% YoY) and adjusted EPS of $0.85 (+39% YoY) were in line with seasonal expectations; adjusted EBITDA margin expanded 60bps to 14.6% on supply chain and restructuring savings .
  • Adjusted 2024 guidance was reiterated: adjusted EBITDA $295–$310M and adjusted EPS $5.05–$5.45; GAAP EPS was lowered to $4.40–$4.80 due to higher M&A and bridge financing costs; total revenue range trimmed for FX (organic growth unchanged at 4–6%) .
  • Orders were $388.5M (-4% YoY) and backlog $663.6M; North America softness persisted (poultry, AGV timing), but management sees improving poultry economics and expects orders to lift in Q2 with sequential margin improvement each quarter in 2024 .
  • Strategic catalyst: definitive agreement signed to combine with Marel; >$125M run-rate cost synergies expected within 3 years (55% OpEx, 45% COGS) with cross-sell and service revenue synergies; regulatory filings and bridge financing secured, targeting year-end close .

What Went Well and What Went Wrong

  • What Went Well

    • Margin execution: adjusted EBITDA margin +60bps YoY to 14.6% on supply chain and restructuring savings; gross margin rose to 35.8% (+160bps YoY). “Margins improved year over year primarily driven by cost savings from our supply chain initiatives and restructuring program.” — CFO .
    • Interest tailwind: net interest swung favorably, adding ~$0.22 to EPS on a $9M improvement versus prior year .
    • Strategic progress: signed definitive agreement with Marel; management reiterated “compelling industrial logic” and >$125M cost synergy target; filings in Iceland/US proceeding, S-4 expected in May and year-end close plan maintained .

  • What Went Wrong

    • Demand softness: Q1 orders -4% YoY (to $389M) and backlog eased to $664M; North America soft, timing of warehouse automation (AGV) orders and continued slow poultry investment weighed on intake .
    • AGV delay: ~$15M of AGV business slipped from Q1 to Q2, reducing book-and-ship and revenue mix in the quarter .
    • Aftermarket dip/mix normalization: aftermarket revenue down ~8% YoY with mix at 52%, reverting from an unusually high mix last year; equipment revenue +~10% YoY, but mix shift tempered margin accretion .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$403.6 $444.6 $392.3
Diluted EPS - Continuing Ops ($USD)$0.95 $1.64 $0.71
Adjusted EPS - Continuing Ops ($USD)$1.11 $1.40 $0.85
Gross Margin %35.7% 36.2% 35.8%
Operating Margin %8.9% 12.4% 7.4%
Adjusted EBITDA ($USD Millions)$66.3 $81.0 $57.4
Adjusted EBITDA Margin %16.4% 18.2% 14.6%
Orders ($USD Millions)$398.0 $418.1 $388.5
Backlog ($USD Millions)$689.2 $678.2 $663.6

Segment/KPIs

KPIQ3 2023Q4 2023Q1 2024
Free Cash Flow ($USD Millions)$33.0 (quarter) N/A (not disclosed)$0.7
Net Debt ($USD Millions)$119.1 $163.1 $168.0
Net Leverage (Net Debt/TTM Adj. EBITDA)0.5x 0.6x 0.6x
Aftermarket Mix (% of Revenue)N/AN/A52%
Equipment vs Aftermarket YoYN/AN/AEquipment +~10%, Aftermarket -~8%

Notes:

  • All figures reflect continuing operations post-AeroTech divestiture; non-GAAP reconciliations provided in exhibits .
  • Seasonality: Q1 is typically the slowest quarter; management expects sequential margin improvement each quarter in 2024 .

Guidance Changes

MetricPeriodPrevious Guidance (Q4’23 PR, Feb 20)Current Guidance (Q1’24 PR, May 1)Change
Revenue ($USD)FY 2024$1,750–$1,780 $1,735–$1,765 Lowered (FX translation)
Income from Continuing Ops ($USD)FY 2024$150–$162 $142–$154 Lowered (higher M&A/bridge costs)
Adjusted EBITDA ($USD)FY 2024$295–$310 $295–$310 Maintained
Adjusted EBITDA Margin (%)FY 202417.0–17.5% 17.0–17.5% Maintained
GAAP EPS ($USD)FY 2024$4.65–$5.05 $4.40–$4.80 Lowered (M&A/bridge financing; discrete tax impact timing)
Adjusted EPS ($USD)FY 2024$5.05–$5.45 $5.05–$5.45 Maintained
Net Interest Income ($USD)FY 2024~+$4M ~+$2M (incl. ~$4M bridge financing impact) Lowered
Tax Rate (%)FY 202422–23% (pre-discretes) 22–23% (pre-discretes); Q2 discrete tax benefit $8–$9M expected Maintained (noting discrete)
Revenue SplitFY 2024H1 ~47% / H2 ~53% H1 ~47% / H2 ~53% Maintained

Earnings Call Themes & Trends

TopicQ3 2023 (Q-2)Q4 2023 (Q-1)Q1 2024 (Current)Trend
Poultry marketNA poultry soft; improving price/cost expected to lift orders; Europe/Asia strengthening Recovery expected back half ’24; EPS margin gains driven by supply chain; upbeat IPPE tone Poultry economics improved (corn stable, deboned breast ~$2/lb); quotes robust; expect Q2 orders, fuller recovery into H2/Q3 Improving pipeline; orders expected to resume in Q2
AGV/Warehouse automationStrong business; book-and-ship below expectations Growth expected in ’24 as backlog ships ~$15M of Q1 AGV slipped to Q2; expect strong Q2 Near-term timing noise; strong Q2 expected
Supply chain initiativesCost optimization, value engineering; margin opportunity largest 25–50bps incremental margin expansion targeted; continued savings ~$5M savings in Q1; on-time delivery improved via supplier consolidation Sustained execution; ongoing savings
Restructuring savingsYTD charges; savings improving $7–$9M 2024 savings; full run-rate by H2 Program completed; ~$18M run-rate savings exiting Q2 Savings ramping; run-rate imminent
GeographyEurope/Asia improving; NA soft Orders momentum; backlog solid Europe solid; Middle East record quarter; NA soft but improving pipeline Mixed; international resilience
Mix/RecurringAftermarket strong in ’23; mix supports margins Recurring momentum incl. OmniBlu; 50/50 mix expected Aftermarket 52% (normalized from elevated ’23); equipment +~10%, aftermarket -~8% YoY Normalization; equipment to outpace aftermarket
Digital (OmniBlu)Adoption supporting recurring growth Continued ramp; converts iOPS contracts Ongoing adoption momentum Growing installed base
Marel combinationIntent announced; synergy >$125M identified; leverage plan <3.5x pro forma close Progressing diligence; tender launch expected Q2 Definitive agreement signed; filings advancing; >$125M cost synergies (55% OpEx/45% COGS); year-end close plan Advancing toward offer/close

Management Commentary

  • “JBT’s first quarter, our seasonally lightest period, came in largely as expected… sixth consecutive quarter of year-over-year improvement in margins.” — CEO Brian Deck .
  • “Gross margin… improvement was driven primarily by the cost saving benefits of restructuring actions and continued progress on our supply chain initiatives.” — CFO Matt Meister .
  • “We realized savings of approximately $5 million… and significant improvement in supplier on-time delivery driven by consolidating procurement activity.” — CFO .
  • “We expect annual run rate [Marel] cost synergies of more than $125 million within 3 years… approximately 45% from COGS and ~55% from OpEx.” — CEO .
  • “Benchmark large bird deboned breast meat is now hovering around $2 per pound versus less than $1 just 5 months ago.” — CEO, on poultry economics .

Q&A Highlights

  • Second-half weighting and backlog visibility: PMs probed H1/H2 split and order trends; management cited strong backlog, improving poultry quotes, and confidence in second-half lift, with FX the main tweak to revenue guidance .
  • Poultry orders timing: Visibility improving from pipeline to quotes; orders expected to commence in Q2 with typical 3–6 month lead times; fuller run-rate likely beyond Q2 .
  • AGV slip: ~$15M shifted from Q1 to Q2; management expects a strong AGV quarter in Q2 .
  • Margin cadence and savings: Run-rate $18M restructuring savings by end of Q2; sequential margin improvement expected each quarter in 2024 .
  • Aftermarket mix: Normalization from unusually high 56% in Q1’23; Q1’24 aftermarket 52% with equipment +~10% and aftermarket -~8% YoY; equipment expected to outpace aftermarket for the rest of the year .

Estimates Context

  • Consensus EPS and revenue estimates from S&P Global were unavailable for JBT due to missing mapping, so we cannot quantify a beat/miss versus Street for Q1 2024. The company reported diluted EPS of $0.71 and adjusted EPS of $0.85 with revenue of $392.3M .
  • Guidance implies adjusted EPS growth of ~28% at midpoint and adjusted EBITDA growth of ~11% for FY 2024; with order softness in North America in Q1 but improving poultry economics and AGV timing, estimate revisions may focus on second-half trajectory and FX headwinds rather than core organic growth (4–6% maintained) .
  • Note: S&P Global consensus data was unavailable; comparisons to Street estimates could not be performed.

Key Takeaways for Investors

  • Q1 execution solid amid seasonality; margin expansion continued on supply chain and restructuring benefits, and net interest tailwind boosted EPS by ~$0.22 — a positive quality-of-earnings signal .
  • Demand inflection watch: Poultry economics have turned favorable; expect Q2 order resumption with H2 revenue lift; AGV backlog/schedule supports near-term revenue recovery .
  • Guidance resilience: Adjusted EBITDA/EPS maintained despite FX and higher transaction costs; GAAP EPS trimmed for bridge financing/M&A — focus on adjusted metrics and sequential margin cadence .
  • Balance sheet optionality: Net leverage ~0.6x supports strategic actions; liquidity intact post AeroTech sale, enabling continued investment and Marel combination .
  • Marel combination is the structural catalyst: >$125M cost synergies identified with credible procurement/OpEx levers; meaningful revenue synergies via full-line solutions and service; regulatory process underway — track tender launch/S-4 timeline .
  • Mix normalization: Aftermarket reverted to ~52% mix; equipment expected to outpace aftermarket in 2024, aiding operating leverage as supply chain benefits flow through .
  • Trading lens: Near-term stock moves likely tied to evidence of Q2 order momentum (poultry/AGV) and any regulatory milestones on Marel; medium-term thesis hinges on sustained margin expansion and synergy realization path .