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John Bean Technologies Corporation (JBT)
Q1 2010 Earnings Call Transcript
May 10, 2010 10:00 am ET
Cindy Shiao – Director, IR
Charlie Cannon – Chairman, President and CEO
Ron Mambu – VP, CFO, Treasurer and Controller
Liam Burke – Janney
Jason Ursaner – CJS Securities
Gregory Macosko – Lord Abbett
Michael Saloio – Sidoti & Company
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I would now like to turn the conference over to Cindy Shiao, Director of Investor Relations. Ma'am, you may begin your conference.
Thank you, Ashley. Good morning, everyone and welcome to our first quarter 2010 conference call. This morning, we issued a Press Release outlining our company's financial performance for the first quarter of 2010. With me on the call are Charlie Cannon, Chairman and CEO and Ron Mambu, Vice President and CFO.
Before we begin, I want to remind everyone that this call may contain certain forward-looking statements that are subject to the Safe Harbor language in today's Press Release and 8-K filings. Both documents are available on our Investor Relations website, as are a reconciliation of non-GAAP financial measures mentioned on today's call to their corresponding GAAP measures. I also refer you to our disclosures regarding risk factors in our 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Now, I will turn the call over to Charlie.
Thanks, Cindy and good morning, everyone. I will begin with a brief update of our performance for the quarter, followed by a discussion of current market conditions for our two segments, as well as our outlook for 2010. Ron will then provide more detail on our financial results.
Given the challenging conditions we faced in 2009 and the lower backlog entering the year, this was a solid quarter with revenue and EBIT results in line with our expectations recognizing that the first quarter is seasonally our weakest.
For the quarter, revenue was unchanged from last year at $169 million while EBIT declined 6% to $7.9 million. Diluted earnings per share were $0.14. On a bright note, both orders and backlog were up sequentially 25% and 35% respectively. Inbound orders also increased 29% year-over-year.
Now let me provide some color on what is driving these trends. Our business is looking up. As I communicated in early March, many of our markets were showing signs of improvement. This trend continued throughout the first quarter. We saw FoodTech inbound in Europe and North America strengthening from the low levels of 2009. Our airline and air freight customers reported improved operating results. Air travel and air freight volumes are forecasted to grow, all of which bodes well for JBT.
Now, let me turn to each of our segments. First, JBT FoodTech. Order sizes for our FoodTech product lines continue to be smaller relative to our historical standard. This was the main contributor to the year-over-year decline in first quarter backlog. However, we are starting to see slightly larger projects for line expansion as some of our customers ramp up production due to increased consumption. We are hopeful that the small ball trend I mentioned in our March year-end call may reverse as the economy improves.
Demand for our freezing and protein processing product lines is improving. First quarter inbound increased year-over-year across all regions. Many of the orders were from non-poultry segments. As for the poultry segment, corn prices have declined recently while poultry prices firm up, which is positive for our customers' bottom line. We have begun discussion with some of our poultry customers regarding their capital requirements and anticipate a rebound in capital spending in the next six to nine months.
Overall, we are very pleased with the level of activity we are seeing for these product lines. However, due to weak demand in 2009, many of our competitors lowered prices on several projects to capture business. We have selectively responded and as a result, we did see some negative impact on our margins. With the economy improving and demand on the rebound, we believe this price pressure will ease.
Turning to the fruit processing product line, as we mentioned on our March call, 2009 drought conditions were the main contributor for this year's lower Florida citrus crop size. In fact, the freeze in January accelerated Florida fruit processing, which mitigated the negative impact for the first quarter. However, the lower Florida crop will impact our results for the next two quarters by an estimated $0.04 to $0.05 a share, as I previously mentioned in the March call.
Additionally, the tomato industry is going through a supply adjustment after record production in 2009. A 7% to 10% reduction in total processed tomato volume is projected for 2010. As a result, we anticipate the demand for tomato processing equipment to remain weak throughout the year. To respond to these lower volumes, we implemented further cost-reduction actions. For our in-container sterilization product line, demand is steady with a slight uptick in Europe.
Lastly, our FoodTech aftermarket volume increased slightly in constant currencies. In summary, for 2010, we expect the FoodTech top line to grow modestly with year-over-year earnings growth, primarily due to the improved market conditions in Europe and North America for our freezing and protein processing product lines.