JBT Corporation Reports Second Quarter 2019 Results

JBT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited and in millions, except per share data)

Three Months Ended
June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenue

$

493.3

$

491.3

$

910.8

$

900.5

Cost of sales

338.3

351.0

628.2

656.6

                Gross profit

155.0

140.3

282.6

243.9

                Gross profit %

31.4

%

28.6

%

31.0

%

27.1

%

Selling, general and administrative expense

103.7

89.6

195.4

174.6

Restructuring expense

4.3

8.5

10.2

21.2

                Operating income

47.0

42.2

77.0

48.1

                Operating income

9.5

%

8.6

%

8.5

%

5.3

%

Pension expense, other than service cost

0.5

0.4

1.0

0.6

Net interest expense

4.2

3.4

7.5

7.1

Income from continuing operations before income taxes

42.3

38.4

68.5

40.4

Provision for income taxes

8.3

4.9

14.8

5.3

Income from continuing operations

34.0

33.5

53.7

35.1

Loss (gain) from discontinued operations, net of taxes

0.3

(0.1)

0.3

0.3

Net income

$

33.7

$

33.6

$

53.4

$

34.8

Basic earnings per share:

Income from continuing operations

$

1.07

$

1.05

$

1.69

$

1.10

Loss from discontinued operations

0.01

—

0.01

0.01

Net income

$

1.06

$

1.05

$

1.68

$

1.09

Diluted earnings per share:

Income from continuing operations

$

1.06

$

1.04

$

1.68

$

1.09

Loss from discontinued operations

0.01

—

0.01

0.01

Net income

$

1.05

$

1.04

$

1.67

$

1.08

Weighted average shares outstanding

Basic

31.9

31.9

31.9

31.9

Diluted

32.0

32.1

32.0

32.3

JBT CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF DILUTED EARNINGS PER SHARE TO ADJUSTED DILUTED EARNINGS PER SHARE

(Unaudited and in millions, except per share data)

Three Months Ended

June 30,

Six Months Ended

June 30,

2019

2018

2019

2018

Income from continuing operations as reported

$

34.0

$

33.5

$

53.7

$

35.1

Non-GAAP adjustments:

Restructuring expense

4.3

8.5

10.2

21.2

M&A related costs⁽¹⁾

10.8

1.4

11.5

1.8

Impact on tax provision from restructuring expense⁽²⁾

(3.7)

(2.6)

(5.3)

(6.0)

Adjusted income from continuing operations

$

45.4

$

40.8

$

70.1

$

52.1

Income from continuing operations as reported

$

34.0

$

33.5

$

53.7

$

35.1

Total shares and dilutive securities

32.0

32.1

32.0

32.3

Diluted earnings per share from continuing operations

$

1.06

$

1.04

$

1.68

$

1.09

Adjusted income from continuing operations

$

45.4

$

40.8

$

70.1

$

52.1

Total shares and dilutive securities

32.0

32.1

32.0

32.3

Adjusted diluted earnings per share from continuing operations

$

1.42

$

1.27

$

2.19

$

1.61

(1)

Beginning in the first quarter of 2019, we changed our presentation of non-GAAP measures to exclude M&A related costs, specifically amortization of inventory step up, integration costs, and transaction expenses. We evaluate operational performance and operating trends after excluding certain expenses incurred to fulfill our acquisition strategy. M&A related costs are excluded from the prior year results to conform to the current year presentation.

(2)

Impact on tax provision was calculated using the Company's annual effective tax rate of 24.5% and 25.6% for June 30, 2019 and 2018, respectively.

The above table reports adjusted income from continuing operations and adjusted diluted earnings per share from continuing operations, which are non-GAAP financial measures. We use these measures internally to make operating decisions and for the planning and forecasting of future periods, and therefore provide this information to investors because we believe it allows more meaningful period-to-period comparisons of our ongoing operating results, without the fluctuations in the amount of certain costs that do not reflect our underlying operating results.

JBT CORPORATION

BUSINESS SEGMENT DATA

(Unaudited and in millions)

Three Months Ended
June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenue

JBT FoodTech

$

343.3

$

361.6

$

637.9

$

665.2

JBT AeroTech

149.9

129.5

272.8

235.1

Other revenue and intercompany eliminations

$

0.1

$

0.2

$

0.1

$

0.2

Total revenue

$

493.3

$

491.3

$

910.8

$

900.5

Income before income taxes

Segment operating profit⁽¹⁾

JBT FoodTech

$

51.3

$

47.4

$

90.0

$

68.9

JBT FoodTech segment operating profit %

14.9

%

13.1

%

14.1

%

10.4

%

JBT AeroTech

17.9

14.7

28.0

22.6

JBT AeroTech segment operating profit %

11.9

%

11.4

%

10.3

%

9.6

%

Total segment operating profit⁽²⁾

69.2

62.1

118.0

91.5

Total segment operating profit %

14.0

%

12.6

%

13.0

%

10.2

%

Corporate expense⁽¹⁾

17.9

11.4

30.8

22.2

Restructuring expense

4.3

8.5

10.2

21.2

Operating income

$

47.0

$

42.2

$

77.0

$

48.1

Operating income %

9.5

%

8.6

%

8.5

%

5.3

%

Other business segment information

Three Months Ended June 30,

Six Months Ended June 30,

Inbound Orders

2019

2018

2019

2018

JBT FoodTech

$

307.8

$

349.9

$

616.9

$

670.6

JBT AeroTech

159.3

180.3

312.0

301.6

Other revenue and intercompany eliminations

$

0.1

$

0.1

$

0.1

$

0.1

Total inbound orders

$

467.2

$

530.3

$

929.0

$

972.3

As of June 30,

2019

2018

Order Backlog

JBT FoodTech

$

418.9

$

440.6

JBT AeroTech

350.6

330.7

Total order backlog

$

769.5

$

771.3

(1) Segment operating profit is defined as total segment revenue less segment operating expenses.  Corporate expense, restructuring expense, interest income and expense, pension expense other than service, and income taxes are not allocated to the segments.  Corporate expense generally includes corporate staff-related expense, stock-based compensation, LIFO adjustments, certain foreign currency related gains and losses, and the impact of unusual or strategic events not representative of segment operations.

(2) Total segment operating profit, as presented elsewhere in this release, is a non-GAAP measure.  The table above includes a reconciliation of total segment operating profit to operating income.  We believe that this measure provides to investors a more comprehensive understanding of the information used by management in evaluating the performance of its segment operations.  It is not intended to nor shall be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP.

JBT CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited and in millions)

Three Months Ended
June 30,

Six Months Ended
June 30,

As of July 29, 2019

2019

2018

2019

2018

Outlook FY 2019

Net Income

$

33.7

$

33.6

$

53.4

$

34.8

$126.0 to $131.0

Loss (gain) from discontinued operations, net of taxes

0.3

(0.1)

0.3

0.3

~1.0

Income from continuing operations as reported

34.0

33.5

53.7

35.1

$127.0 to $132.0

Income tax provision

8.3

4.9

14.8

5.3

39.0 to 40.0

Interest expense, net

4.2

3.4

7.5

7.1

23.0 to 24.0

Depreciation and amortization

15.6

14.1

30.3

27.8

69.0 to 70.0

EBITDA

62.1

55.9

106.3

75.3

$258.0 to $265.0

Restructuring expense

4.3

8.5

10.2

21.2

12.0 to 15.0

Pension expense, other than service cost

0.5

0.4

1.0

0.6

~1.0

M&A related cost

10.8

1.4

11.5

1.8

~19.0

Adjusted EBITDA

$

77.7

$

66.2

$

129.0

$

98.9

$290.0 to $300.0

Beginning in the first quarter of 2019, we changed our presentation of non-GAAP measures to exclude M&A related costs, specifically amortization of inventory step up, integration costs, and transaction expenses. We evaluate operational performance and operating trends after excluding certain expenses incurred to fulfill our acquisition strategy. M&A related costs are excluded from the prior year results to conform to the current year presentation.

The above table reports EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. Given the Company's focus on growth through acquisitions, management believes EBITDA facilitates an evaluation of business performance while excluding the impact of amortization due to the step up in value of intangible assets, and the depreciation of fixed assets. We use Adjusted EBITDA internally to make operating decisions and believe this information is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results.

JBT CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF OPERATING PROFIT TO ADJUSTED EBITDA BY SEGMENT

(Unaudited and in millions)

Three Months Ended June 30, 2019

(In millions)

FoodTech

AeroTech

Corporate
(Unallocated)

Consolidated

Operating profit

$

51.3

$

17.9

$

(22.2)

$

47.0

Restructuring expense

—

—

4.3

4.3

M&A related cost

4.9

0.6

5.3

10.8

Adjusted operating profit

56.2

18.5

(12.6)

62.1

Depreciation and amortization

13.7

1.2

0.7

15.6

Adjusted EBITDA

$

69.9

$

19.7

$

(11.9)

$

77.7

Revenue

$

343.3

$

149.9

$

0.1

$

493.3

Operating profit %

14.9

%

11.9

%

9.5

%

Adjusted operating profit %

16.4

%

12.3

%

12.6

%

Adjusted EBITDA %

20.3

%

13.2

%

15.8

%

Six Months Ended June 30, 2019

(In millions)

FoodTech

AeroTech

Corporate
(Unallocated)

Consolidated

Operating profit

$

90.0

$

28.0

$

(41.0)

$

77.0

Restructuring expense

—

—

10.2

10.2

M&A related cost

5.3

0.9

5.3

11.5

Adjusted operating profit

95.3

28.9

(25.5)

98.7

Depreciation and amortization

26.6

2.2

1.5

30.3

Adjusted EBITDA

$

121.9

$

31.1

$

(24.0)

$

129.0

Revenue

$

637.9

$

272.8

$

0.1

$

910.8

Operating profit %

14.1

%

10.3

%

8.5

%

Adjusted operating profit %

14.9

%

10.6

%

10.8

%

Adjusted EBITDA %

19.1

%

11.4

%

14.2

%

Beginning in the first quarter of 2019, we changed our presentation of non-GAAP measures to exclude M&A related costs, specifically amortization of inventory step up, integration costs, and transaction expenses. We evaluate operational performance and operating trends after excluding certain expenses incurred to fulfill our acquisition strategy. M&A related costs are excluded from the prior year results to conform to the current year presentation.

The above table reports EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. Given the Company's focus on growth through acquisitions, management believes EBITDA facilitates an evaluation of business performance while excluding the impact of amortization due to the step up in value of intangible assets, and the depreciation of fixed assets. We use Adjusted EBITDA internally to make operating decisions and believe this information is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results.

JBT CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF OPERATING PROFIT TO ADJUSTED EBITDA BY SEGMENT

(Unaudited and in millions)

Three Months Ended June 30, 2018

(In millions)

FoodTech

AeroTech

Corporate (Unallocated)

Consolidated

Operating profit

$

47.4

$

14.7

$

(19.9)

$

42.2

Restructuring expense

—

—

8.5

8.5

M&A related cost

1.4

—

—

1.4

Adjusted operating profit

48.8

14.7

(11.4)

52.1

Depreciation and amortization

12.7

0.8

0.6

14.1

Adjusted EBITDA

$

61.5

$

15.5

$

(10.8)

$

66.2

Revenue

$

361.6

$

129.5

$

0.2

$

491.3

Operating profit %

13.1

%

11.4

%

8.6

%

Adjusted operating profit %

13.5

%

11.4

%

10.6

%

Adjusted EBITDA %

17.0

%

11.9

%

13.5

%

Six Months Ended June 30, 2018

(In millions)

FoodTech

AeroTech

Corporate (Unallocated)

Consolidated

Operating profit

$

68.9

$

22.6

$

(43.4)

$

48.1

Restructuring expense

—

—

21.2

21.2

M&A related cost

1.8

—

—

1.8

Adjusted operating profit

70.7

22.6

(22.2)

71.1

Depreciation and amortization

25.2

1.5

1.1

27.8

Adjusted EBITDA

$

95.9

$

24.1

$

(21.1)

$

98.9

Revenue

$

665.2

$

235.1

$

0.2

$

900.5

Operating profit %

10.4

%

9.6

%

5.3

%

Adjusted operating profit %

10.6

%

9.6

%

7.9

%

Adjusted EBITDA %

14.4

%

10.3

%

11.0

%

Beginning in the first quarter of 2019, we changed our presentation of non-GAAP measures to exclude M&A related costs, specifically amortization of inventory step up, integration costs, and transaction expenses. We evaluate operational performance and operating trends after excluding certain expenses incurred to fulfill our acquisition strategy. M&A related costs are excluded from the prior year results to conform to the current year presentation.

The above table reports EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. Given the Company's focus on growth through acquisitions, management believes EBITDA facilitates an evaluation of business performance while excluding the impact of amortization due to the step up in value of intangible assets, and the depreciation of fixed assets. We use Adjusted EBITDA internally to make operating decisions and believe this information is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results.

JBT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in millions)

June 30,

December 31,

2019

2018

Cash and cash equivalents

$

39.1

$

43.0

Trade receivables, net

357.3

323.7

Inventories

260.4

206.1

Other current assets

58.6

45.7

Total current assets

715.4

618.5

Property, plant and equipment, net

265.4

239.7

Other assets

931.5

584.3

Total assets

$

1,912.3

$

1,442.5

Short-term debt and current portion of long-term debt

$

2.9

$

0.5

Accounts payable, trade and other

189.1

191.2

Advance and progress payments

124.6

145.8

Other current liabilities

167.4

147.8

Total current liabilities

484.0

485.3

Long-term debt, less current portion

771.5

387.1

Accrued pension and other postretirement benefits, less current portion

68.0

72.5

Other liabilities

88.8

40.7

Common stock and additional paid-in capital

225.2

226.9

Retained earnings

463.7

416.5

Accumulated other comprehensive loss

(188.9)

(186.5)

Total stockholders' equity

500.0

456.9

Total liabilities and stockholders' equity

$

1,912.3

$

1,442.5

JBT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in millions)

Six Months Ended June 30,

2019

2018

Cash flows from operating activities:

Income from continuing operations

$

53.7

$

35.1

Adjustments to reconcile income to cash provided by operating activities:

Depreciation and amortization

30.3

27.8

Other

7.8

(0.2)

Changes in operating assets and liabilities:

Trade accounts receivable, net

(4.3)

(23.7)

Inventories

(13.8)

(47.2)

Accounts payable, trade and other

(36.0)

9.2

Advance and progress payments

(34.5)

55.5

Other - assets and liabilities, net

9.9

(41.4)

Cash provided by continuing operating activities

13.1

15.1

Cash required by discontinued operating activities

(0.1)

(0.6)

Cash provided by operating activities

13.0

14.5

Cash flows required by investing activities:

Acquisitions, net of cash acquired

(367.8)

(18.8)

Capital expenditures

(17.8)

(18.7)

Other

0.6

1.2

Cash required by investing activities

(385.0)

(36.3)

Cash flows provided by financing activities:

Net proceeds on credit facilities

384.0

55.1

Dividends

(6.3)

(6.6)

Other

(10.0)

(22.6)

Cash provided by financing activities

367.7

25.9

Effect of foreign exchange rate changes on cash and cash equivalents

0.4

(1.8)

(Decrease) increase in cash and cash equivalents

(3.9)

2.3

Cash and cash equivalents, beginning of period

43.0

34.0

Cash and cash equivalents, end of period

$

39.1

$

36.3

JBT CORPORATION

NON-GAAP FINANCIAL MEASURES

FREE CASH FLOW

(Unaudited and in millions)

Six Months Ended June 30,

2019

2018

Cash provided (required) by continuing operating activities

$

13.1

$

15.1

Less: capital expenditures

17.8

18.7

Plus: proceeds from sale of fixed assets

0.6

1.2

Plus: pension contributions

3.1

10.6

Free cash flow (FCF)

$

(1.0)

$

8.2

The above table reports Free cash flow, which is a non-GAAP financial measure. We use Free cash flow internally as a key indicator of our liquidity and ability to service debt, invest in business combinations, and return money to shareholders and believe this information is useful to investors because it provides an understanding of the cash available to fund these initiatives. For Free cash flow purposes we consider contributions to pension plans to more comparable to payment of debt, and therefore excluded these contributions from the calculation of Free cash flow.

JBT CORPORATION

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF DILUTED EARNINGS PER SHARE GUIDANCE TO ADJUSTED DILUTED EARNINGS PER SHARE GUIDANCE

(Unaudited and in cents)

Guidance

Q3 2019

Full Year 2019

Diluted earnings per share from continuing operations

$0.90 - $0.95

$3.95 - $4.15

Non-GAAP adjustments:

Restructuring expense ⁽¹⁾

0.07

0.40

M&A related costs⁽²⁾

0.14

0.60

Impact on tax provision from Non-GAAP adjustments⁽³⁾

(0.06)

(0.25)

Adjusted diluted earnings per share from continuing operations

$1.05 - $1.10

$4.70 - $4.90

(1) Restructuring expense is estimated to be approximately $2 million for Q3 and $12 - 15 million for full year 2019. The mid-point amount has been divided by our estimate of 32.1 million total shares and dilutive securities to derive earnings per share.

(2) M&A related costs are estimated to be between $4 - 5 million for Q3 and approximately $19 million for full year 2019. The mid-point amount has been divided by our estimate of 32.1 million total shares and dilutive securities to derive earnings per share. Beginning in the first quarter of 2019, we changed our presentation of non-GAAP measures to exclude M&A related costs, specifically amortization of inventory step up, integration costs, and transaction expenses. We evaluate operational performance and operating trends after excluding certain expenses incurred to fulfill our acquisition strategy. M&A related costs are excluded from the prior year results to conform to the current year presentation.

(3) Impact on tax provision was calculated using the Company's effective tax rate of approximately 25%.

JBT CORPORATION

ADJUSTMENTS DUE TO ASC 606 BY SEGMENT FOR FISCAL YEAR 2018

(Unaudited and in millions)

As reported

Year-to-Date

Q1

Q2

Q3

Q4

December 31, 2018

Revenue

JBT FoodTech

$

303.6

$

361.6

$

332.5

$

363.7

$

1,361.4

JBT AeroTech

105.6

129.5

149.5

173.5

558.1

Other revenue and intercompany eliminations

—

0.2

(0.1)

0.1

0.2

Total revenue

$

409.2

$

491.3

$

481.9

$

537.3

$

1,919.7

Segment operating profit

JBT FoodTech

$

21.5

$

47.4

$

41.9

$

58.7

$

169.5

JBT AeroTech

7.9

14.7

17.6

23.9

64.1

Total segment operating profit

$

29.4

$

62.1

$

59.5

$

82.6

$

233.6

Adjustments due to ASC 606

Year-to-Date

Q1

Q2

Q3

Q4

December 31, 2018

Revenue

JBT FoodTech

$

(51.6)

$

(28.0)

$

(18.2)

$

(15.8)

$

(113.6)

JBT AeroTech

1.1

(3.6)

0.4

(11.4)

(13.5)

Other revenue and intercompany eliminations

—

—

—

—

—

Total revenue

$

(50.5)

$

(31.6)

$

(17.8)

$

(27.2)

$

(127.1)

Segment operating profit

JBT FoodTech

$

(13.1)

$

(6.0)

$

(3.7)

$

(1.2)

$

(24.0)

JBT AeroTech

0.1

(1.4)

(0.4)

(2.0)

(3.7)

Total segment operating profit

$

(13.0)

$

(7.4)

$

(4.1)

$

(3.2)

$

(27.7)

Amounts without adoption