Q3 2024 John Bean Technologies Corp Earnings Call
Good morning, and welcome to JBT Corporation's third quarter 2020 earnings Conference call. My name is real and I will be your conference operator today.
Unknown Executive: Good morning and welcome to JBT Corporation's third quarter, 2020 for earnings conference call.
Operator: My name is Prila, and I will be your conference operator today. As a reminder, today's call is being recorded. At this time, online has been placed on mute to prevent any back or noise.
During today's call is being recorded at this time all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press star one again.
Operator: After this, because your marks, there will be a question and answer session. If you would like to ask a question during this time, simply press a star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press a star one again. Thank you.
Thank you I will now turn the call over to Jbt's director of Investor Relations Marta you Spangler to begin today's conference.
Marley Spangler: I will now turn to Col over to JBT's Director of Investor Relations, Marley Spangler, to begin today's conference. Thank you, Prila. Good morning, everyone, and welcome to our third quarter 2020 earnings conference call.
Marta Spangler: Thank you preload good morning, everyone and welcome to our third quarter 2024 earnings Conference call.
Marley Spangler: To me on the call is our Chief Executive Officer, Brian Deck, and Chief Financial Officer, Matt Meister. In today's call, we will use forward-looking statements that are subject to the safe harbor language in yesterday's press release and 8-K filing. JBT's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available in the Investor Relations section of our website. Also, our discussion today includes references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure can be found in the Investor Relations section of our website.
Marta Spangler: On the call is our Chief Executive Officer, Brian deck, and Chief Financial Officer, Matt Meister.
Marta Spangler: Today's call we will use forward looking statements that are subject to the safe Harbor language in yesterday's press release, and 8-K filing Jbt's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available in the investor.
Marta Spangler: Relations section of our website also our discussion today includes references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure can be found in the Investor Relations section of our website now I'll turn the call over to Brian.
Brian Deck: Now, I'll turn the call over to Brian. Thanks, Marley. Good morning, everyone. We were very pleased with JBT's results for the third quarter. As expected, we posted double-digit year-over-year revenue growth and captured meaningful margin expansion. Moreover, we continued to generate strong orders and benefit from the ongoing recovery and demand from the global poultry and market. Overall, our progress and performance in the third quarter reinforces our confidence and our full year expectations of 3-5% revenue growth in 2024 and adjusts the EBITDA growth of 10% at the midpoint of our guidance.
Brian Deck: Thanks, Harley and good morning, everyone.
Brian Deck: We were very pleased with Jbt's results for the third quarter as expected, we posted double digit year over year revenue growth and captured meaningful margin expansion.
Brian Deck: Moreover, we continued to generate strong orders and benefit from the ongoing recovery in demand from the global poultry end market.
Brian Deck: Overall, our progress and performance in the third quarter reinforces our confidence in our full year expectations of 3% to 5% revenue growth in 2024, and adjusted EBITDA growth of 10% at the midpoint of our guidance.
Matt Meister: Matt will walk you through an analysis of the third quarter. He will also discuss the securing of commitments for financing the morale merger.
Speaker Change: Matt will walk you through an analysis of the third quarter.
Speaker Change: He will also discuss the securing of commitments for financing the morale merger.
Brian Deck: Then, I will speak about end-market and geographic trends, discuss updates on the combination with Morale and provide some highlights on our exceptional automated guided vehicle business.
Speaker Change: Then I will speak about end market and geographic trends discuss updates on the combination with morale and provide some highlights on our exceptional automated guided vehicle business Matt.
Matt Meister: Matt? Thank you, and good morning. As Brian mentioned, we achieved strong growth and margin improvement in a third quarter of 2024. Revenue of 454 million increased 12.4% year-over-year. As anticipated, we converted our strong backlog to revenue and recovered the revenue shortfall from the second quarter. Adjusted EBITDA of 82 million increased 23% year-over-year, and our adjusted EBITDA margin of 18% increased 160 basis points. This year-over-year improvement was driven by higher volume flow through, as well as cost savings from both our restructuring program and supply chain initiatives. Adjusted EPS in the third quarter was $1.50, or $1.11 in the prior year.
Matt.
Speaker Change: Yes.
Matt Meister: Thank you and good morning, as Brian mentioned, we achieved strong growth and margin improvement in the third quarter of 2024.
Matt Meister: Revenue of $454 million increased 12, 4% year over year as anticipated, we converted our strong backlog to revenue and recover the revenue shortfall from the second quarter.
Matt Meister: Adjusted EBITDA of $82 million increased 23% year over year, and our adjusted EBITDA margin of 18% increased 160 basis points.
Matt Meister: This year over year improvement was driven by higher volume flow through as well as cost savings from both our restructuring program and supply chain initiatives.
Matt Meister: Adjusted EPS in the third quarter was $1 50 versus $1 11 in the prior year.
Matt Meister: EPS benefited primarily from our strong operational performance and positive net interest income. Here today we generated free cash flow of 79 million. For reference, on a trailing 12-month basis, as of September 30th, we achieved free cash flow of 184 million. Our strong performance in the third quarter is the result of higher income and improved working capital management. And for the full year, we remain confident in our ability to achieve a free cash flow conversion rate in excess of 100%. Given JBT's strong year-to-date performance and backlog, we are reiterating our full-year guidance for revenue, adjusted EBITDA, and adjusted EPS.
Matt Meister: EPS benefited primarily from our strong operational performance and positive net interest income.
Matt Meister: Year to date, we generated free cash flow of $79 million.
Matt Meister: For reference on a trailing 12 month basis as of September 30th we achieved free cash flow of $184 million.
Matt Meister: Our strong performance in the third quarter as a result of higher income and improved working capital management.
Matt Meister: And for the full year, we remain confident in our ability to achieve our free cash flow conversion rate in excess of 100%.
Matt Meister: Given jbt's strong year to date performance and backlog, we are reiterating our full year guidance for revenue adjusted EBITDA and adjusted EPS.
Matt Meister: We are, however, updating guidance for income from continuing operations and GAAP EPS to reflect our plan to settle all outstanding obligations of JBT's pension plan through a combination of voluntary lump sum settlements and a purchase of an annuity contract. In the fourth quarter, we expect a portion of eligible participants to elect to receive lump sum settlements from the plan. And as a result, we expect to incur approximately 30 million in non-cash pre-tax charges during the quarter. This brings our full year estimate for income from continuing operations to $116,000,000 in GAAP EPS to $3.60 to $3.90.
Matt Meister: We are however, updating guidance for income from continuing operations and GAAP EPS to reflect our plan to settle all outstanding obligations of Jbt's pension plan through a combination of voluntary lump sum settlements and the purchase of an annuity contract.
Matt Meister: And in the fourth quarter, we expect a portion of eligible participants to elect to receive lump sum settlements from the plan.
As a result, we expect to incur approximately $30 million and noncash pretax charges during the quarter.
Matt Meister: This brings our full year estimate for income from continuing operations to $116 million to $125 million in.
And GAAP EPS to $3 60 to $3 90.
Matt Meister: Additionally, in the first quarter of 2025, we expect to settle the remaining obligations of the plan and anticipate further noncash pretax charges of approximately $145 million.
Matt Meister: Additionally, in the first quarter of 2025, we expect to settle the remaining obligations of the plan and anticipate further non-cash pre-tax charges of approximately $145 million. Given the plan's fully funded status, we anticipate these actions will have an immaterial impact on cash flow.
Given the plan is fully funded status. We anticipate these actions will have an immaterial impact on cash flow.
Matt Meister: Yes.
Matt Meister: Lastly, as outlined in our press release in October, we secured financing commitments contingent on the completion of the merger with Morale. Once executed, we will issue a $900 million term loan fee and expand our existing revolving credit facility to $1.8 billion. Funds from this new capital structure, along with cash on the balance sheet, will be used to pay the cash portion of the transaction, refinance Morale's outstanding debt, and pay transaction-related expenses. As a first-time issuer of the term loan fee market, we are very pleased with the overall demand and pricing structure. With an offering that was more than three times over-subscribed, we were able to upsize and achieve favorable pricing.
Matt Meister: Lastly, as outlined in our press release in October we secured financing commitments.
<unk> on the completion of the merger with morale.
Matt Meister: Once executed we will issue a $900 million term loan b and expand our existing revolving credit facility to $1 8 billion.
Matt Meister: Funds from this new capital structure, along with cash on the balance sheet will be used to pay the cash portion of the transaction refinanced <unk> outstanding debt and pay transaction related expenses.
Matt Meister: As a first time issuer in a term loan b market. We are very pleased with the overall demand and pricing structure.
With an offering that was more than three times oversubscribed, we were able to upsize and achieve favorable pricing.
Matt Meister: Additionally, we believe that lenders' willingness to add a leverage-based pricing step-down indicates confidence and management's ability to deliver the business. As we have stated, we are committed to reducing JBT's leverage to less than three times by year 2025.
Matt Meister: Additionally, we believe that lenders willingness to add a leverage based pricing stepped down indicates confidence in managements ability to delever the business.
Matt Meister: As we have stated we are committed to reducing JBT leverage to less than three times by year end 2025.
Brian Deck: With that, I'll turn the call back to Brian.
With that I'll turn the call back to Brian.
Brian Deck: Thanks, Matt let me start with the order trends.
Brian Deck: Thanks, Matt. Let me start with order trends. Orders, which totaled $440 million in the quarter, increased 10% from the prior year period. You feel good about what the order strength means for the current state of our business, and it positions us well as we plan for 2025. Driving the overall gains and orders, we enjoyed continued recovery and demand from the poultry and market, which showed improvement globally. Pet food, food and vegetable, and farmer and markets also experienced healthy demand in the quarter. orders at AGV normalized from the record second quarter. While there were pockets of weakness, including certain CPG areas like beverages, our overall strength is a function of GBT's broad portfolio and end market and customer exposure.
Brian Deck: Quarters, which totaled $440 million in the quarter increased 10% from the prior year period.
Brian Deck: We feel good about what the order strength means for the current state of our business.
Brian Deck: And it positions us well as we plan for 2025.
Brian Deck: Driving the overall gains in orders, we enjoyed continued recovery in demand from the poultry end market, which showed improvement globally.
Brian Deck: Pet food food and vegetable and pharma end markets also experienced healthy demand in the quarter.
Brian Deck: Orders at HGV normalized from the record second quarter.
Brian Deck: While there were pockets of weakness, including certain CPG areas like beverages.
Brian Deck: Our overall strength as a function of gbt's broad product portfolio.
Brian Deck: And end market and customer exposure.
Brian Deck: As we have said, we have the diversified portfolio to serve our food and beverage customers, regardless of changing consumer preferences. Geographically, we experience nice pick-up and order activity in Asia and a good quarter in Europe. North America also experienced good order momentum. As we mentioned last quarter, our AGV business is posting record sales and orders. Secular demand for facility automation, which is critical to addressing labor shortages and high costs, remains robust. When this happened within the factory and where else automation market, AGV boasts of differentiated product, the results of decades of experience, the quality of our technology and the ability to integrate with customers' operations.
Brian Deck: As we have said, we have the diversified portfolio to serve our food and beverage customers, regardless of changing consumer preferences.
Brian Deck: Geographically, we experienced a nice pickup in order activity in Asia, and a good quarter in Europe.
Brian Deck: North America also experienced good order momentum.
Brian Deck: Yeah.
Brian Deck: As we mentioned last quarter, our <unk> business is posting record sales and orders.
Brian Deck: Secular demand for facility automation, which is critical to addressing labor shortages and high costs remains robust.
Brian Deck: Within the factory and automate and warehouse automation market.
Brian Deck: Well, it's a differentiated product the result of decades of experience the quality of our technology and the ability to integrate with customers operations.
Brian Deck: Over the past few years, we have invested heavily in AGV's R&D and adjusted its business model. Specifically, we have focused on the intelligence, safety, and service element of our value proposition while focusing on larger, scalable projects with our customers as opposed to bespoke projects. This strategy is paying off. We are seeing customers who installed AGV at one or two warehouses return to us as they seek to establish an expanded automation solution across their enterprise. Additionally, with the introduction of our proprietary motion operating system, we have moved to a subscription model, which requires a multi-year software contract along with the parts and service contract.
Brian Deck: Over the past few years, we have invested heavily in <unk> R&D and adjusted its business model.
Brian Deck: Specifically, we are focused on the intelligence safety and service element of our value proposition, while focusing on larger scalable projects with our customers as opposed to bespoke projects.
Brian Deck: This strategy is paying off.
Brian Deck: We're seeing customers, who installed <unk> at one or two warehouses returned to us as they seek to establish an expanded automation solution.
Across their enterprise.
Brian Deck: Additionally, with the introduction of our proprietary motion operating system, we have moved to a subscription model, which requires a multiyear software contract along with the parts and service contract.
Brian Deck: This allows for a high-touch, premium value proposition based on delivering the highest performance and safety throughout the life of our systems, with constant access to the most recent software features and cybersecurity upgrades. With this model, we expect recurring revenue to continue to grow meaningfully as we build out the installed base. At the same time as we discussed last quarter, changes to our manufacturing process and product standardization have improved internal efficiency and cost. As a result, we have enhanced our ability to deliver AGV systems and reduced lead times to address ongoing robust demand.
Brian Deck: This allows for a high touch premium value proposition based on delivering the highest performance and safety throughout the life of our systems with constant access to the most recent software features and cyber security upgrades.
Brian Deck: With this model, we expect recurring revenue continued to grow meaningfully as we build out the installed base.
Brian Deck: At the same time as we discussed last quarter changes to our manufacturing process and product standardization have improved internal efficiency and cost.
Brian Deck: As a result, we have enhanced our ability to deliver AGC Adv systems and reduced lead times to address ongoing robust demand.
Brian Deck: Moving on to even bigger developments on the merger with Moral, we continue to focus on integration planning and day-one preparedness, including an evaluation of our future organizational structure. In our planning, we are viewing our businesses through the lens of the customer to create a go-to-market structure that aligns with their needs. We have also sought to capitalize on the respective strengths of JBT and Moral's complementary portfolios, enabling us to optimize operational synergies while providing the most comprehensive solutions to customers. On the regulatory front, we are nearing the final stage as a completing the required approval. We have been engaged in an in-depth pre-notification process and dialogue with the European Commission and have received feedback that we will be able to formally file our notification to the EC in the coming days.
Brian Deck: Moving on to even bigger developments on the merger with <unk> we continue.
Brian Deck: To focus on integration planning and day, one preparedness, including an evaluation of our future organizational structure.
Brian Deck: In our planning we are viewing our businesses through the lens of the customer to create a go to market structure that aligns with their needs.
Brian Deck: We have also sought to capital thoughts to capitalize on the respective strengths of GBT and <unk> complementary portfolios, enabling us to optimize operational synergies, while providing the most comprehensive solutions to customers.
Brian Deck: On the regulatory front, we are nearing the final stages of completing the required approvals.
Brian Deck: We have been engaged in an in depth prenotification process and dialogue with the European Commission.
Brian Deck: And have received feedback that we will be able to formally file our notification to the EC in the coming days.
Brian Deck: Once we submit this merger filing a 25 day business review period begins.
Brian Deck: After which we anticipate receiving formal approval.
Brian Deck: In terms of the voluntary takeover itself.
Brian Deck: For yourself, JBT and Morale will work with the FSA in Iceland to determine the appropriate extension which will provide adequate time following the regulatory approvals for Morale shareholders to tender their shares. JBT and Morale will issue press releases related to the extension of the offer. Based on these most recent developments, the timeline to close remains on or about the end of 2024. Based on our extensive outreach and conversations with morale shareholders, we remain confident that they are supportive of the merger.
Brian Deck: And morale worked with FSA and Iceland to determine the appropriate extension, which will provide adequate time following the regulatory approvals for neuro shareholders to tender their shares.
Brian Deck: <unk> and morale will issue press releases related to the extension of the offer.
Brian Deck: Based on these most recent developments the timeline to close remains on or about the end of 2024.
Brian Deck: And based on our extensive outreach and conversations with morale shareholders. We remain confident that they are supportive of the merger.
Brian Deck: Lastly, I want to thank the JBT team members. JBT's growth, operational excellence, and passionate commitment to our customers wouldn't be possible without our people around the world.
Lastly, I want to thank the JBT team members Jbt's growth operational excellence and passionate commitment to our customers wouldn't be possible without our people around the world.
Unknown Executive: Let's open up the call.
Brian Deck: Now, let's open up the call operator.
Operator: Operator? Thank you. And if you will now begin the question and answer session, if you would like to ask a question, simply press a star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Again, please press star one to join the queue. One moment please for your first question.
Brian Deck: Yes.
Speaker Change: Thank you Andy will now begin the question and answer session. If you would like to ask a question. Thank you press the star followed by the number one on your telephone keypad. If you would like to withdraw your question should you press Star one again.
Speaker Change: Again, Please press star one to join us to join the queue. One moment. Please for your first question.
Unknown Executive: And your first question comes from the line of me. Make the break with R.B.R.W.
Speaker Change: And your first question comes from the line of meat.
Meg debris with RB.
Speaker Change: W. Baird. Please go ahead.
Unknown Executive: Bear, please go ahead.
Unknown Executive: Thank you.
Meg debris: Thank you good morning, everyone.
Unknown Executive: Good morning, everyone. Morning.
Brian Deck: Good morning, Brian.
Brian Deck: Brian. Brian, you spent maybe more time than normal talking about AGU, and it sounds like this is a portion of the business that is young quite well. It would be great to get a bit of a reminder from you in terms of the size of this business at this point, especially since it's been growing so much. And I'm curious how margins look like for this product. Is this positive for MIPS, or is it maybe a little bit below your average portfolio margin?
Speaker Change: Brian you spent maybe more time to normal talking about AG and it sounds like wishes.
Brian Deck: <unk> of the business.
Brian Deck: As you won't quite well.
Brian Deck: It will be great to get a bit of a reminder, from you in terms of.
Brian Deck: The size of this business at this point associations.
It's been growing so much.
Brian Deck: I'm curious how margins look like for this product.
Speaker Change: Positive for mix.
Speaker Change: Or is it maybe a little bit below your average portfolio margin.
Brian Deck: Right, so thanks for the question. So, in terms of revenue, they will be a little bit north of 150 million this year, with impressive growth, like you said, north of 30% growth this year. And in terms of from a margin perspective, if you look at JBT's guidance for the year, it is 17 to 17 and a half percent; they are above that range there. We're striving for 20% plus this year.
Speaker Change: Great. So.
Thanks for the question so.
Speaker Change: In terms of revenue they will be north a little bit north of $150 million this year.
Speaker Change: With.
Speaker Change: Impressive growth like you said north of 30% growth this year.
Speaker Change: And in terms of from a margin perspective, if you look at Jbt's guidance for the year is 17% to 17, 5%. They are above that range there, what's driving for 20% plus this year.
Brian Deck: Interesting, and you know, as you think about this business and its potential, I'm sort of curious as to how you think, you know, two, three years out, and you know, is there anything within the AGB business that would be able to either. Cross-cell or cross-pollinate with what Marelo is doing, some of their customers. Yeah, we'd love some comments on that as well. Sure. So, yes, interesting. If you think about the portfolio that they have, anywhere where you have warehouse automation, it's applicable. Certainly, quite a few of our CPG customers, beverage customers, are using these operations, these AGBA vehicles.
Speaker Change: Interesting.
Speaker Change: As you think about this business.
Thanks Joel.
Speaker Change: I'm sort of curious as to as to.
Speaker Change: How you're seeing.
Speaker Change: Two three years out.
Speaker Change: <unk>.
Speaker Change: Is there anything within.
The <unk> business that would be able to either.
Speaker Change: Cross sell or cross pollinate with what <unk> doing some of their customers.
Speaker Change: Yes, we'd love some comments on that as well.
Sure. So yes interesting when you think about the.
Speaker Change: The portfolio that they have anywhere where you have warehouse automation, it's applicable certainly quite a few of our CPG customers beverage customers are using these operations.
Speaker Change: These HEV vehicles, I would say probably the easiest area. If you will to cross sell with this would be under pet food business. So.
Brian Deck: I would say probably the easiest area, if you will, to cross-sell what this would be on their pet food business. So, their winger acquisition from a couple years ago, there are potentially opportunities, as you go downstream with some of the other end markets that they have, once they get into a business, but certainly on, I would say, the more traditional CPG type and pet food type items, that's the clear opportunity.
Speaker Change: The winger acquisition from a couple of years ago, there are potentially opportunities as you go downstream.
Speaker Change: With some of the other end markets that they have once they get into a warehouse stage that is a potential.
Speaker Change: But certainly I would say the more traditional CPG type in pet food type items, that's the clear opportunity.
Brian Deck: Got it. Then maybe on a core business, poultry sounds better. I'd love a little more insight as to what you're hearing from customers there. I mean, frankly, why are things getting better? How sustainable do you think this is into 25? Right. So, it's good news. They continue to make good money. We continue to have good conversations with them. We are aware of several projects that they are working on, either from, I would say, a brownfield perspective, but also from a refurbishment or replacement of individual lines. So, as they obviously, they've had some pent-up or deferred investment over the years.
Speaker Change: Got it.
Speaker Change: Then maybe on the core business.
Speaker Change: Poultry sounds better.
Speaker Change: A little more insight as to what Youre hearing from customers. There I mean, and frankly why are things getting better how sustainable do you think this is into 2025.
Speaker Change: Right so.
Speaker Change: It's good news they continue to make good money. We continue to have good conversations with them we are aware of.
Speaker Change: Several projects that they are working on either from I would say a brownfield perspective, but also from a.
Speaker Change: A refurbishment or replacement of individual lines. So as they obviously they've had some pent up our deferred investment over the years.
Brian Deck: We do generally feel good about it.
Speaker Change: We do generally feel good about it so I think it is.
Brian Deck: So, I think, you know, it never snaps back at the pace you would really want it to go, but we do have a consistent kind of, say, improvement month over month, quarter over quarter. Our pipeline is good. We saw some; it was really nice to see in the third quarter was some orders on the primary side. So, you know, JBT is not a huge player on the primary side. We do chillers and some other systems. But what's nice about that? That's where morale is particularly strong.
It never snaps back at the pace you would really want it to go but we do have a consistent kind of.
Speaker Change: Say improvement month over month quarter over quarter. Our pipeline is good we saw some what was really nice to see.
Speaker Change: In the third quarter was some orders on the primary side. So JBT, it's not a huge player in the primary side.
Speaker Change: We do Chillers and some other systems.
Speaker Change: But what's nice about that that's where morale is particularly strong. So we're hopefully hoping that as a precursor to some of the strength that we would hope to see into 2025 and thereafter I think in terms of visibility.
Brian Deck: So, we're hoping that is precursor to some of the strength that we would hope to see into 2025 and thereafter. I think in terms of visibility, I would say we probably have a good 18 to 24 months visibility as we sit here. Obviously, that could change it, you know, if the fundamentals change. But the fundamentals are hanging in there for sure, both from an input perspective. We've seen some, sees all the clients in the poultry prices, but overall that they remain at levels where our customers are quite profitable. So, generally, we feel good about that, and we would expect kind of this slow but steady march to get back to full recovery.
Speaker Change: I would say, we probably have a good 18 to 24 months visibility as we sit here, obviously that could change if the fundamentals change, but the fundamentals are hanging in there for sure from an input perspective, we've seen some seasonal declines in the poultry prices, but.
Speaker Change: But overall they remain at levels, where our customers are quite profitable so.
Speaker Change: Generally we feel good about that.
Speaker Change: And we would expect kind of this.
Speaker Change: Slow, but steady March to get back to full recovery and I think it kind of depends on if we're talking.
Brian Deck: And I think it kind of depends on it, you know, for talking primary or secondary or end of line is to when you get to those full recoveries. But either 25 or perhaps 2026 full recovery.
Speaker Change: Primary or secondary or end of line.
As to when you get to those full recoveries, but either 25 or perhaps 2026 for recovery.
Brian Deck: I guess my final question, and this, I don't know if you actually want to answer this or tackle the topic, but we've got an election here coming up in a few days, and the whole discussion around immigration and offensive deportations from Mr. Trump have certainly made headlines. I do remember during the first Trump administration there was some disruption that protein processors have had, ICE rates, things of that sort that have impacted their labor force. Your discussions with customers are they sort of looking at this as something that will need to be addressed on there and meeting this whole idea that we're going to need some additional automation or equipment that is maybe more efficient in order to sort of manage the inherent risk to their labor force.
Speaker Change: I guess my final question.
<unk>.
Speaker Change: I don't know if you actually want to answer this or talk about the topic.
Speaker Change: We've got an election year coming up in a few days and.
Speaker Change: The whole discussion around immigration and.
Speaker Change: And passion deep locations awesome for Mr. Trump of certainly made headlines and I do remember hearing a horse Trump administration.
Speaker Change: <unk>.
Speaker Change: Some disruption.
Speaker Change: Protein processors have had.
Ice raids things of that sort that impossible gaining labor force.
Speaker Change: Our discussions with customers all gaining sort of looking at it.
Speaker Change: That is something that we would need to be addressed in there and meeting this whole idea that we're going to need.
Speaker Change: Additional automation or equipment that is maybe more efficient in order to sort of manage that.
Speaker Change: Herring risks to daily Labor force that could develop down the line. Thank you.
Unknown Executive: That could develop down the line.
Brian Deck: Thank you. Yeah, it's a very interesting and applicable question. I will say over the last, what we have heard over the last few years is that labor has been more available, and I would say more of our efforts have been on improving yield, efficiency, etc. and a little bit less, but we saw during the Trump administration, I'm pure labor replacement. So under a circumstance where you have tighter controls on immigration, I frankly would expect more opportunities on going from I say manual cut up lines where you folks standing shoulder to shoulder with knives and whatnot to more automated solutions. That would generally be the thesis under a Trump administration.
Yes.
Speaker Change: A very interesting and applicable question I will say over the last what we have heard over the last few years.
Speaker Change: Is that labor has been more available.
Speaker Change: And I would say more of our efforts have been on improving.
Speaker Change: Yield efficiency et cetera, and a little bit less but we saw during the Trump administration on pure labor replacement.
Speaker Change: So under a circumstance, where you have tighter controls on immigration.
Speaker Change: I frankly would expect more opportunities on going from I'll say manual cut up lines, where you folks standing shoulder to shoulder with knives and whatnot to more automated solutions that would generally be the thesis under a Trump administration, obviously, we'll have to see how long how long it takes for that.
Unknown Executive: Obviously, we'll have to see how long it takes for that to play out and whatnot, but that would generally bode well for companies like JBT and Murrow. Appreciate it.
Speaker Change: Play out and whatnot.
Speaker Change: But that would generally.
Speaker Change: Bode well for us.
Speaker Change: And companies like JBT in neuro.
Speaker Change: I appreciate it thank you.
Unknown Executive: Thank you.
Unknown Executive: Thanks. Your next question comes from the line of PROS, Baron Blackwade, William Blair; please go ahead. Good morning, gentlemen. Morning.
Speaker Change: Thanks.
Speaker Change: Your next question comes from the line of Ross <unk> with William Blair. Please go ahead.
Speaker Change: Hey, good morning, gentlemen, good morning.
Unknown Executive: Hey, can you maybe help us size the poultry contribution to orders in the quarter and then also do your expectations for orders X in the year in 2025? It's trying to get a sense of seasonality versus potential acceleration as we think about the cadence from next year. Yeah, so in terms of the incremental orders versus the second quarter, something in the range of 10 to 15 million more, ballpark. So, and I would say we're still that does not yet bring us I would say fully back to kind of where we otherwise need to be, kind of as I mentioned with Meg on the where we get to full recovery.
Speaker Change: Can you maybe help us size the poultry contribution to orders in the quarter and then also on your expectations for orders exiting the year into 2025 is trying to get a sense seasonality versus potential acceleration as you think about the cadence for next year.
Speaker Change: Yes.
Speaker Change: In terms of the incremental orders versus the second quarter something in the range of 10 to 15 million more.
Speaker Change: Ballpark.
Speaker Change: So and I would say, we're still that does not yet bring us I'll say fully back to kind of.
Where we otherwise need to be kind of as I mentioned with Meg on the when we get to full recovery, but decent.
Brian Deck: But so decent improvements in the quarter, specifically as I mentioned on the primary side. Yeah, it's okay. So 10 to 15 more poultry quarter of a quarter. I mean, in North America, specifically in North America. Yeah, and now what was interesting.
Speaker Change: <unk> improvements.
Speaker Change: In the quarter, specifically as I mentioned on the on the primary side.
Speaker Change: Got it okay. So it's tended to be more in poultry quarter over quarter I mean in North America plasma typically in north right now.
Speaker Change: Now what was interesting.
Ross: Ross So that was North America, we actually saw some improvements outside of North America as well specifically Asia. So that was nice to see because as you know Asia is kind of a lumpy business for us they tend to be two full lines, but.
Ross: But we are starting to see some investments in poultry in Asia, and actually Europe had a decent quarter as well.
Speaker Change: No that's a perfect segue because I'm trying to understand I mean is it more jia.
Speaker Change: Geographic angle between why Youre seeing more of an acceleration in your poultry orders versus Earl thus far we obviously haven't seen our third quarter results or is it kind of brownfield Greenfield upstream downstream as you kind of noted with the strength in your business in the quarter.
Speaker Change: Well I won't specifically talk to morale and kind of.
Speaker Change: Where they have been but I will just generally say JBT does play further along in the line kind of at your second your second assumption.
Speaker Change: They are more upfront.
Speaker Change: And full processing type primary secondary lines Jbt's further down the line generally, which so theyre not as full line solutions. They tend to be one or two years or three pieces of equipment, which are have shorter sure.
Speaker Change: <unk> sales cycles, and shorter lead times versus a full system. So just a little bit different place, where we play in the lines.
Speaker Change: Okay.
Speaker Change: And then thinking about the morale timeline here 25 day. He noticed I think that kind of mitigates any concerns from a remedy which is a positive but can you just remind us of what other countries outside of Europe, we should be watching out for as it relates to filings.
Speaker Change: Yes, so we're really pleased with where we are with the EU. It's been a very long process very collaborative process, we've had with them multiple back in force.
Speaker Change: To get to this stage, that's a major milestone.
Speaker Change: For those that are preliminary with the EU the ECB filing process. So.
Speaker Change: Good day, and giving us the green light to go ahead and a formal filing to kickoff. This 25 day waiting period is very very positive. We have one other jurisdiction that we're finalizing I would say I would characterize it is and Thats, Australia getting some i's and crossing a few t's that does that is out there but.
Speaker Change: We feel confident that will play itself out within the same.
Speaker Change: Timeframe, which basically brings us to full regulatory expectation.
Speaker Change: Approvals by the end of November and then we would again extend the.
Speaker Change: The veto the voluntary takeover offer period to probably a couple of weeks after that we're working with morale.
Precisely the dates that we choose and then we will announce that here in short order.
Speaker Change: Perfect all right if I can maybe just get one more in.
Speaker Change: Now that you've had more time with the business to look under the Hood.
Speaker Change: We expect maybe upward revision of synergy targets. Once the acquisition is closed or maybe you can give us your early read there. It just looks like rail margins based off consensus arent, where they really need to be in regards to the pro forma targets and maybe there's a little bit more cost out that will be required to hit your accretion goals.
Speaker Change: Well I would say we have done quite a bit of work over the last six months, we have gotten to know them quite a bit we certainly have a <unk>.
Speaker Change: Final in pipeline, if you will to deliver on the $125 million of all in savings.
Speaker Change: Synergies.
Speaker Change: So I would just say we're confident that we will if we get to the point, where we think we can do more we'll certainly let you know but.
Speaker Change: Really there is only so much you can too until you actually combine businesses.
Speaker Change: In terms of visibility perfect visibility so I <unk>.
Speaker Change: It's appropriate to just stick with the 125 as I sit here, yes, I think the margin improvement that we're also expecting is going to come from.
Speaker Change: Again further recovery in the protein markets, and how that benefits Earl and the higher volume. So not only is our synergies, but there's also just the recovery in volumes, which will help drive improved margins at the morale side and certainly they are also they are also doing their own improvement efforts kind of regardless of.
Speaker Change: Well, let's say synergy opportunity.
That's perfect I'll leave it here congrats guys.
Speaker Change: <unk>.
Speaker Change: Your next question comes from the line of Walter Liptak with Seaport Research. Please go ahead.
Walter Liptak: Hi, Thank you good morning, everyone and congratulations on the nice quarter.
Walter Liptak: Wanted to ask about the.
Walter Liptak: The order strength and the recovery that we're seeing.
In the poultry market. So it seems like it's still early days.
Walter Liptak: But as we look at it geographically where do you expect most of this.
Walter Liptak: Where do you see the recovery strength coming from.
Speaker Change: Is it it sounds like Asia is doing well Europe's doing well.
Speaker Change: Maybe I would say, yes, I would say the pace of improvement probably North America remains our biggest opportunity.
Speaker Change: For those who have been following for years North America has always just.
Speaker Change: Always the strongest market for us and it hasnt been over the last two years or so so typically that's our go to in terms of the strength and consistency and so that's why I do think just in terms of getting back to that level of strength and consistency is what we're looking forward to that would be the primary.
Speaker Change: Okay Alright, great.
Speaker Change: And then.
Speaker Change: The aftermarket sales, we haven't talked too much about that on this call, but the growth how did you feel about the 5%.
Speaker Change: Plus.
Speaker Change: Revenue growth and can you tell us about some of the initiatives that you've had to keep that.
Speaker Change: Growing in May.
Speaker Change: Maybe any positives or negatives around aftermarket yes.
Speaker Change: Yes.
Speaker Change: Sure No we're very happy with the 5% growth as you know that's a more stable business on the equipment side I think we had a 20% plus equipment growth in the quarter and that's obviously reflective of some of the recoveries and the strength in the backlog and whatnot that we've been talking about over the past few years. So.
Speaker Change: If we can continue to deliver consistent mid single digit aftermarket growth kind of in good times and bad that's a really good answer obviously considering that it does have a better margin profile.
Speaker Change: In terms of the things that we're doing.
Speaker Change: It is really about provide theres a couple of things, but the most important things that we have to continue to focus on.
Speaker Change: Is on time delivery in part so we're doing some.
Additional work on making sure we've got the right parts in the right places and really focusing on on that.
Certainly continue to penetrate with our omni blue digital offering helps us in terms of those relationships.
Speaker Change: With our customers and having that more engaged model and then lastly, our service network, making sure. We've got again right. The right people in the right places the responsiveness. So it's it's about having the right metrics looking through the eyes of the customer and what are the metrics that they feel are important not just things that you think about from a business person.
Speaker Change: <unk> like inventory turnover and whatnot like really kind of flipping that those metrics and that's the focus that we've had in that.
Speaker Change: The combination with morale adds to our ability on the aftermarket side meaningfully again, they've got some really well developed.
Speaker Change: Parts distribution centers, so we're working with that how to optimize the usage of that but also a pretty impressive service network in terms of their people and their coverage so and thats, usually one of the biggest constraints in terms of being able to serve our customers effectively our service techs are quite valuable.
Speaker Change: They know the business and the products and the customers quite well so.
Speaker Change: It's a really wonderful opportunity as we come together.
Speaker Change: Okay, great. Okay. Thanks, a lot.
Unknown Executive: Thank you.
Speaker Change: Thank you and once again, if you would like to ask a question. Thank you press the star followed by the number one on your telephone keypad.
Operator: And once again, if you would like to ask a question, see if you press a star followed by the number one on your telephone keypad. And there are no further questions at this time.
Speaker Change: And there are no further questions at this time I would like to turn it back to Mr. Ryan <unk> for closing remarks.
Brian Deck: I would like to turn it back to Mr. Ryan Deck; we're closing remarks. Thank you all for joining us this morning. As always, Marley will be available if you have any follow-up questions.
Speaker Change: Thank you all for joining us this morning as always <unk> will be available. If you have any follow up questions. Thank you have a great day.
Unknown Executive: Thank you. Have a great day.
Unknown Executive: Thank you.
Speaker Change: Thank you and this concludes today's conference call. Thank you all for participating you may now disconnect.
Operator: And this concludes today's conference call. Thank you all for participating. You may now disconnect.
Operator: Please wait. The conference will begin shortly. Thank you.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: Okay.
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Okay.
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Speaker Change: [music].