John Bean Technologies Corporation

Good morning and welcome to JBT Corporation's second quarter 2022 earnings conference call. My name is Erica and I will be your conference operator today. As a reminder, today's call is being recorded. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star followed by the number one again. I will now turn the call over to JBT's Vice President of Corporate Development and Investor Relations, Kedrick Meredith, to begin today's conference.

Thank you, Erica. Good morning, everyone, and welcome to our second quarter 2022 conference call. With 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 8K 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 on 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.

Thanks, Kedrick, and good morning, everyone. JVT made progress in the second quarter of 2022 with sequential gains in revenue, margins, and earnings. We had record sales of FoodTech while Aerotech continued its march to recovery. However, persistent disruption from inflation, supply chain shortages, logistics challenges, and COVID-related absenteeism continued to weigh on margins. foreign exchange was a greater headwind than anticipated. Additionally, the concern we raised last quarter about developing economic pressures and the impact of the Ukrainian war on the European markets has materialized. At the same time, as we unveiled with our Elevate 2.0 strategy, one of JBT's pillars of growth comes from our plan to deploy more than $1 billion of capital on strategic M&A over the next four years. We are executing on that strategy. On July 1, we announced the acquisition of Alco Food Machines. Alco's solutions complement JBT's portfolio in further processing for high-growth markets, including convenience meals, poultry, and plant-based proteins. It has excellent technology that is well regarded in the marketplace. Alco also provides further penetration into the attractive German market as well as the opportunity to leverage its technology globally. And yesterday, we announced a definitive agreement to acquire BevCorp. BevCorp provides filling and closing systems for ready-to-drink carbonated beverages, a growth market that goes beyond soft drinks to include alcoholic beverages and blends, energy drinks, seltzers, and sparkling waters. Compelling aspects of BevCorp include its unique process know-how and best-in-class service culture, as reflected by its EBITDA margins in the low-to-mid 20% range. BevCorp serves the largest players in the market with long-term relationships and operates 100% in North America. Its technology provides a great adjunct to GBT's existing solutions for the beverage market. And aftermarket represents north of 60% of revenue, providing a resilient business model with a proven record of growth and stability. It also maintains strong cash flow with a low CapEx profile. Moreover, as a spinoff of a publicly traded company, it operates with discipline and brings a talented management team. While we recognize acquisitions in this economic environment require higher scrutiny and selectivity, BevCorp and ALCO are two companies we've tracked and been interested for several years and provide a great strategic fit that we believe adds to our customer value proposition and shareholder value creation.