JBT Corporation Reports Third Quarter 2020 Results

CHICAGO, Oct. 27, 2020 /PRNewswire/ --

Third Quarter Highlights:

• Revenue of $419 million and earnings per share of $0.54 or $0.83 as adjusted
• Continued debt reduction from strong cash flows
• Sequential orders increased 18% at FoodTech and 35% at AeroTech

JBT Corporation (NYSE: JBT), a leading global technology solutions provider to high-value segments of the food & beverage industry, today reported results for the third quarter of 2020.

"As previously announced, Tom Giacomini, JBT's former Chairman, President and CEO, passed away earlier this month," said Brian Deck, Interim Chief Executive Officer. "We were deeply saddened by the loss and share our deepest condolences with his family and friends. It is our honor to carry on his legacy at JBT and advance a strategy that has created a high performing organization focused on continuous improvement and delivering comprehensive solutions to our customers."

Brian Deck is serving as Interim CEO, while JBT's Board of Directors completes an internal and external search for a permanent successor. Matt Meister has been named Interim CFO.

"Third quarter 2020 performance exceeded our expectations from a P&L and cash flow standpoint," continued Deck. "Moreover, we captured a double-digit pickup in orders on a sequential basis. While we remain cautious due to the risks associated with the global pandemic, we are encouraged that customer engagement improved, converting to higher orders in the quarter. I am extremely proud of the entire JBT team for their vigilance in following the health and safety protocols we know are necessary to continue to serve our customers." 

Comparisons in this news release are to the comparable period of the prior year, unless otherwise noted. All discussions for the third quarter of 2020 relate to organic trends, as there were no significant acquisitions completed over the past 12 months.  

Third Quarter 2020

Third quarter 2020 revenue of $419 million declined 14 percent year over year. Operating income was $28.3 million and net income was $17.2 million. Adjusted EBITDA of $59.7 declined 21 percent year-over-year while adjusted EBITDA margin declined 130 basis points to 14.2 percent. 

Revenue and earnings declined year over year due to the disruption caused by the pandemic. Reductions in global passenger air travel and global foodservice production were main factors affecting demand for JBT products and services.

FoodTech revenue declined 10 percent, while operating profit margin declined 10 basis points and adjusted EBITDA margin declined 160 basis points to 18.1 percent.

AeroTech revenue declined 24 percent with a 470 basis point contraction in the operating margin and a 280 basis point contraction in the adjusted EBITDA margin.

Corporate expense declined 6 percent year over year, despite $3.5 million in management succession costs.

Diluted earnings per share from continuing operations was $0.54 for the third quarter of 2020 compared with $1.04 for the third quarter of 2019. Adjusted earnings per share was $0.83 compared with $1.28 in the year-ago period. 

Third quarter 2020 orders increased 10 percent at FoodTech and declined 39 percent at AeroTech, compared to the same period in 2019. Backlog was unchanged at FoodTech and declined 27 percent at AeroTech.  

JBT generated $161 million in cash from operations, or free cash flow of $140 million, in the first three quarters of 2020. Liquidity at the end of the quarter, which includes cash plus borrowing capacity, stood at $448 million with a leverage ratio of 2.2x net debt to EBITDA, as defined in the Company's credit agreement.

Restructuring Activities

In the third quarter of 2020, JBT incurred exit costs of $9 million associated with the previously announced manufacturing capacity rationalizations. During the quarter, manufacturing operations at the AeroTech facility in Spain were significantly downsized. The Company also began the process of rationalizing two FoodTech manufacturing operations. An additional $1 to $2 million in exit costs are expected in the fourth quarter of 2020.  

As a result of these activities, the Company expects to realize $0.5 million in cost savings in the fourth quarter of 2020 and expects incremental cost savings of about $5 million during 2021.

Outlook 

"While the specter of the global pandemic still creates uncertainty for the fourth quarter and 2021, we are encouraged by the quality of our sales funnel, increasing levels of customer engagement, and the sequential pickup in orders in the third quarter of 2020," concluded Deck. 

Based on current information available to management, the Company expects FoodTech revenue growth of 3 - 5 percent sequentially in the fourth quarter of 2020 with operating margins of 13 - 14 percent and adjusted EBITDA margins in the 18 - 19 percent range.  

At AeroTech, the Company expects a 7 - 8 percent sequential decline in fourth quarter revenue with operating margins of approximately 10 percent and adjusted EBITDA margins in the 11 - 12 percent range.

Corporate expense is expected to be approximately $14 million in the fourth quarter, including $2 to $3 million in the previously discussed restructuring activities and management succession costs. Interest expense is forecast at $4.5 million with a tax rate of 25 percent.

Based on these forecasts, earnings per diluted share guidance for the fourth quarter is $0.75 - $0.85 on a GAAP basis and $0.80 - $0.90 on an adjusted basis.

Third Quarter 2020 Earnings Conference Call

A conference call is scheduled for 10:00 a.m. ET on Wednesday, October 28, 2020, to discuss third quarter financial results. Participants may access the conference call through Online Registration: http://www.directeventreg.com/registration/event/2863799. An online audio replay of the call will be available on the Company's Investor Relations website shortly after the call.

JBT Corporation (NYSE: JBT) is a leading global technology solutions provider to high-value segments of the food & beverage industry with focus on proteins, liquid foods and automated system solutions. JBT designs, produces and services sophisticated products and systems for multi-national and regional customers through its FoodTech segment. JBT also sells critical equipment and services to domestic and international air transportation customers through its AeroTech segment. JBT Corporation employs approximately 6,200 people worldwide and operates sales, service, manufacturing and sourcing operations in more than 25 countries. For more information, please visit www.jbtc.com.

This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond JBT's ability to control. Forward-looking statements include, among others, statements relating to the expected impact of the COVID-19 pandemic on our business and our results of operations, our plans to mitigate the impact of the pandemic, our future financial performance, our strategic plans, our restructuring plans and expected cost savings from those plans and our liquidity. These risks and uncertainties include, but are not limited to: the duration of the COVID-19 pandemic and the effects of the pandemic on our ability to operate our business and facilities, on our customers, on our supply chains and on the economy generally; fluctuations in our financial results; unanticipated delays or acceleration in our sales cycles; deterioration of economic conditions; disruptions in the political, regulatory, economic and social conditions of the countries in which we conduct business; changes to trade regulation, quotas, duties or tariffs; risks associated with current and future acquisitions; potential effects of the U.K.'s exit from the E.U.; fluctuations in currency exchange rates; difficulty in implementing our business strategies; increases in energy or raw material prices and availability of raw materials; changes in food consumption patterns; impacts of pandemic illnesses, food borne illnesses and diseases to various agricultural products; weather conditions and natural disasters; impact of climate change and environmental protection initiatives; risks related to corporate social responsibility; our ability to comply with the laws and regulations governing our U.S. government contracts; acts of terrorism or war; termination or loss of major customer contracts and risks associated with fixed-price contracts; customer sourcing initiatives; competition and innovation in our industries; our ability to develop and introduce new or enhanced products and services and keep pace with technological developments; difficulty in developing, preserving and protecting our intellectual property or defending claims of infringement; catastrophic loss at any of our facilities and business continuity of our information systems; cyber-security risks; loss of key management and other personnel; potential liability arising out of the installation or use of our systems; our ability to comply with U.S. and international laws governing our operations and industries; increases in tax liabilities; work stoppages; fluctuations in interest rates and returns on pension assets; availability of and access to financial and other resources; and other factors described under the captions "Risk Factors" in the Company's most recent Annual Report on Form 10-K and the Company's most recent Quarterly Report on Form 10-Q filed by JBT with the Securities and Exchange Commission.  In addition, many of our risks and uncertainties are currently amplified by and will continue to be amplified by the COVID-19 pandemic. Given the highly fluid nature of the COVID-19 pandemic, it is not possible to predict all such risks and uncertainties. JBT cautions shareholders and prospective investors that actual results may differ materially from those indicated by the forward-looking statements. JBT undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, subsequent events or changes in circumstances or otherwise.

We provide non-GAAP financial measures in order to increase transparency in our operating results and trends. These non-GAAP measures eliminate certain costs or benefits from, or change the calculation of, a measure as calculated under U.S. GAAP. By eliminating these items, we believe we provide a more meaningful comparison of our ongoing operating results, consistent with how management evaluates performance. Management uses these non-GAAP measures in financial and operational evaluation, planning and forecasting.

These calculations may differ from similarly-titled measures used by other companies. The non-GAAP financial measures disclosed are not intended to be used as a substitute for, nor should they be considered in isolation of, financial measures prepared in accordance with U.S. GAAP.