Yahoo Finance John Bean Technologies Corp (JBT) Q1 2024 Earnings Call Transcript Highlights: Strong ...
Revenue: $392 million, up 1% year over year.
Gross Margin: 35.8%, improved by 160 basis points.
Adjusted EBITDA: $57 million, increased 6% year over year.
Adjusted EBITDA Margin: 14.6%, up 60 basis points.
Adjusted EPS: $0.85, compared to $0.61 in the prior year.
Free Cash Flow: Seasonally slowest quarter, aiming for over 100% conversion rate for the full year.
Full Year 2024 Outlook: Adjusted EBITDA $295 million to $310 million; Adjusted EPS $5.05 to $5.45.
Organic Revenue Growth: Expected at 4% to 6% for the year.
GAAP EPS Guidance: Updated to $4.40 to $4.80.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
John Bean Technologies Corp reported a revenue increase of 1% year-over-year to $392 million in the first quarter.
Adjusted EBITDA increased by 6% year-over-year, with margins expanding by 60 basis points to 14.6%.
Gross margin improved by 160 basis points to 35.8%, driven by cost-saving benefits from restructuring actions and supply chain initiatives.
First quarter adjusted EPS rose to $0.85 from $0.61 in the prior year, positively impacted by operational improvements and net interest expense improvement.
The company reiterated its full-year 2024 guidance for adjusted EBITDA at $295 million to $310 million and adjusted EPS at $5.05 to $5.45, indicating strong year-over-year growth.
Negative Points
Orders in North America showed some softness, and the AGV business experienced order timing issues.
The company adjusted its total revenue range to account for current expectations for foreign exchange translation, indicating potential volatility from currency fluctuations.
M&A costs for the full year are now estimated to be $30 million to $35 million, excluding any transaction contingent fees, indicating significant expenses related to mergers and acquisitions.
The effective tax rate for the quarter was higher, including a discrete item of approximately $0.03 per share, which negatively impacted earnings.
While the company expects organic revenue growth of 4% to 6%, there is uncertainty in order conversion rates, particularly in the poultry industry, which may affect future revenue recognition.
Q & A Highlights
Q: Can you provide insights into the expected sales lift in the second half of the year, given the recent order declines? A: Brian Deck, President and CEO, explained that the company has a strong backlog and visibility into delivery schedules, which supports their confidence. He highlighted the expected improvements in the poultry industry, which constitutes about 25% of their market, contributing to the anticipated sales lift as the year progresses.
Q: What is the level of visibility into poultry orders for Q2, and is there a risk of these orders slipping into the second half of the year? A: Brian Deck noted that while there is always a risk of order slippage, the company is currently seeing strong quote activity, which is expected to convert to orders in the coming quarters. He remains optimistic about the conversion of these quotes into actual orders, despite not expecting to be at full run rate in Q2.
Q: How did April perform in terms of orders for AGV and poultry, and are you seeing any lift? A: Brian Deck did not provide specific monthly details but indicated that each month in Q1 showed improvement over the previous one, setting a positive trend for Q2. He expects a strong quarter for AGV in Q2, particularly recovering from a $15 million order slip from Q1.
Q: Can you discuss the expected cadence of cost savings from the restructuring program into Q2 and the second half of the year? A: Matthew Meister, CFO, stated that the company would achieve the $18 million run rate in savings by the end of Q2, with a slight additional impact expected in Q3. Brian Deck added that margins are expected to increase sequentially every quarter in 2024, with each quarter also expected to perform better than the corresponding quarters in 2023.
Q: Regarding the aftermarket sales, which saw a decline in the quarter, can you provide insights into this trend? A: Brian Deck explained that the decline in aftermarket sales was a reversion to the mean, as Q1 of the previous year had unusually high aftermarket activity. He expects equipment sales to slightly outpace aftermarket for the rest of the year due to the recovery and delivery of the backlog.
Q: Could you provide more details on the expected synergies from the Merrell transaction, particularly on sales synergies? A: Brian Deck discussed the synergy potential, emphasizing the value proposition of full airline solutions and the pull-through of equipment. He mentioned that the combined service capabilities globally would significantly benefit customers, improving their operational efficiency and uptime.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
