John Bean Technologies CORP (JBT)·Q4 2023 Earnings Summary

Executive Summary

• Q4 2023 delivered margin-led upside: Adjusted EBITDA rose 18% YoY to $81.0M with margin expanding 260 bps to 18.2%, and adjusted EPS grew 24% to $1.40; revenue was $444.6M (+1% YoY), with EPS and margins exceeding guidance while revenue met expectations .
• Mix/operations drove outperformance: gross margin expanded to 36.2% (from 32.6%) and operating margin to 12.4% (from 9.3%), reflecting pricing, supply chain actions, and restructuring savings; GAAP EPS of $1.64 included a discrete ~$10.7M tax benefit excluded from adjusted EPS .
• Orders/backlog steady: Q4 orders were $418.1M and year-end backlog $678.2M; management cited improving order trends in Europe/Asia and early signs of recovery in North American poultry into 2H24 .
• 2024 guide implies continued margin expansion (Adj. EBITDA $295–$310M; 17.0–17.5% margin) and 5–7% reported growth (4–6% organic); JBT updated GAAP EPS and income guidance lower to reflect ~$15M 1H24 Marel-related costs (no change to adjusted metrics) .
• Potential stock catalysts: formal Marel tender launch (timing shifted to 2Q), proof of poultry capex recovery in 2H, continued supply chain-driven margin gains, and OmniBlu/AGV execution .

What Went Well and What Went Wrong

• What Went Well

  • Margin expansion and EPS beat: “fourth quarter margins and earnings per share exceeded our guidance while revenue met our expectations,” driven by strong operations and supply chain execution; adjusted EBITDA margin up 260 bps to 18.2% .
  • Cash and balance sheet: 2023 free cash flow of $166.5M (129% conversion) and net leverage ~0.6x after AeroTech sale; year-end cash $483.3M supports flexibility .
  • Order momentum outside NA poultry: Q4 orders $418.1M and full-year orders +5% YoY; strengthening demand in Europe/Asia and robust AGV pipeline underpin 2024 .

• What Went Wrong

  • North American poultry still soft: equipment demand in 2023 was “north of 20%” below mid‑cycle; management expects only partial recovery in 2H24, with fuller recovery in 2025 .
  • Restructuring/M&A costs: Q4 incurred ~$2M restructuring expense and ~$2.4M M&A costs; 2024 GAAP EPS/income guidance trimmed to reflect ~$15M 1H M&A costs for Marel (no impact to adjusted metrics) .
  • Seasonal/near-term cadence: Mgmt reiterated typical Q1 seasonal softness and 47%/53% 1H/2H revenue split for 2024, implying back-half dependence on poultry recovery and sourcing benefits .

Financial Results

KPIs and Balance Sheet

Additional Q4 details: revenue +1% YoY; adjusted EBITDA +18% YoY; discrete tax benefit ~$10.7M excluded from adjusted EPS; LIFO→FIFO inventory accounting change recast history (no impact on adjusted metrics) .

Guidance Changes

Q4 2023 vs prior guide: Company’s Q3 release guided Q4 adj. EBITDA $73–$79M and adj. EPS $1.25–$1.40; actuals were $81.0M and $1.40, respectively (beat on EBITDA; at top end on adj. EPS) .

Earnings Call Themes & Trends

Management Commentary

• CEO on 2023 and strategy: “JBT delivered solid year-over-year earnings growth and continued margin expansion… advancing digital solutions and growing recurring revenue” .
• CFO on Q4 beat: “fourth quarter margins and earnings per share exceeded our guidance while revenue met our expectations… highlighted by strong operational performance and excellent execution on our supply chain initiatives” .
• 2024 set-up: “Mid‑single‑digit organic top line growth… strengthening demand… margin expansion through supply chain and manufacturing efficiency… ongoing restructuring benefits” .
• Supply chain focus: “Consolidating spend… standardizing components… reduce complexity… plan to generate 25–50 bps of incremental margin expansion in 2024” .
• Marel: “Transformative… complementary portfolios… identified cost synergies of more than $125 million within 3 years” .

Q&A Highlights

• Marel timing/regulatory: Tender most likely 2Q as regulatory workstreams dictate timing; antitrust viewed manageable given complementarity; formal shareholder engagement post-launch .
• 2024 EPS/margin drivers: Roughly 50/50 split between volume and margin expansion; $7–$9M restructuring savings, continued sourcing/value-engineering, fixed-cost leverage offset by growth investments .
• Q1 framing: Modest YoY growth; ~75–100 bps YoY margin improvement expected each quarter in 2024; seasonal softness typical .
• Recurring vs equipment: Recurring grew strongly in 2023 aided by deferred capex and Bevcorp mix; 2024 moderates as equipment recovers; mix ~50/50 with incremental OmniBlu contribution .
• Poultry depth/recovery: 2023 NA poultry equipment >20% below mid‑cycle; expect partial recovery in 2H24, more normal in 2025 .

Estimates Context

• S&P Global consensus estimates for JBT’s Q4 2023 (EPS/Revenue/EBITDA) were unavailable via our data connector at the time of analysis. As a result, comparisons to external consensus cannot be provided; we instead benchmarked actuals vs company guidance (Q4 adj. EBITDA $81.0M vs $73–$79M guide; adj. EPS $1.40 vs $1.25–$1.40 guide) .
• Implication: Estimate models should reflect higher Q4 margins and the company’s unchanged adjusted 2024 guides (with lower GAAP EPS/income due to 1H24 M&A costs), and incorporate H2-weighted revenue cadence and 22–23% tax rate .

Key Takeaways for Investors

• Margin momentum is intact and increasingly structural (sourcing/value engineering, recurring, restructuring), with 2024 adjusted EBITDA margin guided +~85 bps at the midpoint to 17.25% .
• 2024 earnings power levered to back‑half poultry recovery and AGV deliveries; watch order inflection in NA poultry into mid‑year as a key datapoint .
• Digital strategy is translating into customer value and stickier aftermarket; OmniBlu adoption plus 50/50 mix supports resiliency and price/cost neutrality (~1% price) .
• Balance sheet capacity (net leverage ~0.6x) provides optionality for M&A; Marel tender (cost synergies >$125M target) is a major potential re‑rating event but carries timing/regulatory execution risk .
• Near-term trading setup: Q1 seasonally softer but margins up YoY; sequential improvement expected each quarter—confirmation could be a catalyst; revenue skew to 2H .
• Model considerations: Use 22–23% tax rate, ~+$4M net interest income, ~$50–$60M capex, and ~$15M 1H24 M&A costs excluded from adjusted metrics; revenue split ~47%/53% 1H/2H .
• Risk watchlist: pace of NA poultry recovery, supply chain savings realization, Marel deal timing/antitrust, and recurring mix normalization as equipment recovers .

Appendix: Full-Year 2023 Highlights

• Revenue $1,664.4M (+5% YoY), adjusted EBITDA $273.1M (+20%), margin 16.4% (+210 bps), adjusted EPS $4.10 (+12%); FCF $166.5M (129% conversion); backlog $678.2M; leverage ~0.6x .