10-Q 1 jbt-20220331.htm 10-Q jbt-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2022
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission File Number 1-34036
John Bean Technologies Corporation
(Exact name of registrant as specified in its charter)
Delaware91-1650317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)
Identification No.)
70 West Madison Street,Suite 4400
Chicago,Illinois60602
(Address of principal executive offices)(Zip code)
(312) 861-5900
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareJBTNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at April 22, 2022
Common Stock, par value $0.01 per share31,784,331
1


PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended March 31,
(In millions, except per share data)20222021
Revenue:
Product revenue$400.9 $360.7 
Service revenue68.3 57.1 
Total revenue469.2 417.8 
Operating expenses:
Cost of products281.8 245.1 
Cost of services47.9 39.5 
Selling, general and administrative expense108.4 94.4 
Restructuring expense0.5 1.0 
Operating income 30.6 37.8 
Interest expense, net2.1 2.1 
Net income before income taxes28.5 35.7 
Income tax provision2.9 8.7 
Net income $25.6 $27.0 
Basic earnings per share:
Net income $0.80 $0.84 
Diluted earnings per share:
Net income $0.80 $0.84 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.  
2


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended March 31,
(In millions)20222021
Net income$25.6 $27.0 
Other comprehensive income, net of income taxes
Foreign currency translation adjustments0.1 4.5 
Pension and other postretirement benefits adjustments1.6 1.7 
Derivatives designated as hedges7.3 3.2 
Other comprehensive income 9.0 9.4 
Comprehensive income$34.6 $36.4 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.  
3


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except per share data and number of shares)March 31, 2022December 31, 2021
Assets:
Current Assets:
Cash and cash equivalents$84.2 $78.8 
Trade receivables, net of allowances236.9 239.1 
Contract assets104.0 94.4 
Inventories275.6 229.1 
Other current assets76.4 77.3 
Total current assets777.1 718.7 
Property, plant and equipment, net of accumulated depreciation of $347.3 and $339.2 respectively
269.2 267.6 
Goodwill681.9 684.8 
Intangible assets, net329.1 342.6 
Other assets152.6 127.7 
Total Assets$2,209.9 $2,141.4 
Liabilities and Stockholders' Equity:
Current Liabilities:
Short-term debt$0.1 $ 
Accounts payable, trade and other212.5 186.0 
Advance and progress payments218.7 190.2 
Other current liabilities164.6 173.7 
Total current liabilities595.9 549.9 
Long-term debt669.9 674.4 
Accrued pension and other postretirement benefits, less current portion53.2 57.6 
Other liabilities107.3 109.0 
Commitments and contingencies (Note 13)
Stockholders' Equity:
Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued in 2022 or 2021
  
Common stock, $0.01 par value; 120,000,000 shares authorized; March 31, 2022: 31,770,216 issued and outstanding; December 31, 2021: 31,769,967 issued and outstanding
0.3 0.3 
Common stock held in treasury, at cost March 31, 2022: 0 shares and December 31, 2021: 0 shares
  
Additional paid-in capital215.9 214.2 
Retained earnings755.8 733.4 
Accumulated other comprehensive loss(188.4)(197.4)
Total stockholders' equity783.6 750.5 
Total Liabilities and Stockholders' Equity$2,209.9 $2,141.4 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
4


JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
(In millions)20222021
Cash flows from operating activities:
Net income $25.6 $27.0 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization19.9 18.3 
Stock-based compensation1.7 1.8 
Other1.7 1.0 
Changes in operating assets and liabilities:
Trade receivables, net and contract assets(6.5)20.1 
Inventories(47.2)(0.9)
Accounts payable, trade and other27.2 11.1 
Advance and progress payments28.4 11.3 
Accrued pension and other postretirement benefits, net(2.0)(0.2)
Other assets and liabilities, net(9.7)(3.8)
Cash provided by operating activities39.1 85.7 
Cash flows from investing activities:
Acquisitions, net of cash acquired(0.4)(15.9)
Capital expenditures(26.7)(8.9)
Proceeds from disposal of assets0.1 0.6 
Cash required by investing activities(27.0)(24.2)
Cash flows from financing activities:
Net proceeds (payments) on short-term debt0.1 (1.9)
Net payments for domestic credit facilities(4.5)(44.9)
Dividends(3.2)(3.2)
Cash required by financing activities(7.6)(50.0)
Effect of foreign exchange rate changes on cash and cash equivalents0.9 (1.5)
Increase in cash and cash equivalents5.4 10.0 
Cash and cash equivalents, beginning of period78.8 47.5 
Cash and cash equivalents, end of period$84.2 $57.5 
Supplemental Cash Flow Information:
Non-cash investing in capital expenditures, accrued but not paid$6.0 $0.1 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
5



JOHN BEAN TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

Three Months Ended March 31, 2022
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at December 31, 2021$0.3 $ $214.2 $733.4 $(197.4)$750.5 
Net income— — — 25.6 — 25.6 
Common stock cash dividends, $0.10 per share
— — — (3.2)— (3.2)
Foreign currency translation adjustments, net of income taxes of $(0.2)
— — — — 0.1 0.1 
Derivatives designated as hedges, net of income taxes of $(2.6)
— — — — 7.3 7.3 
Pension and other postretirement liability adjustments, net of income taxes of $(0.5)
— — — — 1.6 1.6 
Stock-based compensation expense— — 1.7 — — 1.7 
Balance at March 31, 2022$0.3 $ $215.9 $755.8 $(188.4)$783.6 

Three Months Ended March 31, 2021
(In millions)Common StockCommon Stock Held in TreasuryAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Equity
Balance at December 31, 2020$0.3 $(1.0)$229.9 $627.8 $(219.9)$637.1 
Net income— — — 27.0 — 27.0 
Issuance of treasury stock— 0.1 (0.1)— —  
Common stock cash dividends, $0.10 per share
— — — (3.2)— (3.2)
Foreign currency translation adjustments, net of income taxes of $(1.1)
— — — — 4.5 4.5 
Derivatives designated as hedges, net of income taxes of $(1.1)
— — — — 3.2 3.2 
Pension and other postretirement liability adjustments, net of income taxes of $(0.6)
— — — — 1.7 1.7 
Stock-based compensation expense— — 1.8 — — 1.8 
Balance at March 31, 2021$0.3 $(0.9)$231.6 $651.6 $(210.5)$672.1 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
6


JOHN BEAN TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business
John Bean Technologies Corporation and its majority-owned consolidated subsidiaries (the “Company,” “JBT,” “our,” “us,” or “we”) provide global technology solutions to high-value segments of the food and beverage and air transportation industries. The Company designs, produces and services sophisticated products and systems for multi-national and regional customers through JBT FoodTech and JBT AeroTech segments. The Company has manufacturing operations worldwide that are strategically located to facilitate delivery of its products and services to its customers.

Basis of Presentation
In accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, the accompanying unaudited condensed consolidated financial statements (the “interim financial statements”) do not include all of the information and notes for complete financial statements as required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). As such, the accompanying interim financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2021, which provides a more complete description of the Company’s accounting policies, financial position, operating results, business, properties, and other matters. The year-end condensed consolidated Balance Sheet was derived from audited financial statements, but does not include all annual disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary for a fair statement of the Company's financial condition and operating results as of and for the periods presented. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the interim results and trends in the interim financial statements may not be representative of those for the full year or any future period.

Use of estimates
Preparation of financial statements that follow U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Recently Issued Accounting Standards Not Yet Adopted

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This standard is effective for annual periods beginning after December 15, 2021 and should be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2021-10 within its Form 10-K for the fiscal year 2022.

7


NOTE 2. ACQUISITIONS

During fiscal year 2021 the Company acquired 100% of voting equity of three businesses. The Company did not make any acquisitions during the three months ended March 31, 2022. A summary of the acquisitions made during 2021 is as follows:
DateType Company/Product LineLocation (Near)Segment
November 2, 2021Stock
Urtasun Tecnología Alimentaria S.L ("Urtasun")
Navarra, SpainJBT FoodTech
A provider of fruit and vegetable processing solutions, particularly in the fresh packaged and frozen markets. The Urtasun acquisition extends the Company's capabilities in providing fruit and vegetable processing solutions.
July 2, 2021StockCMS Technology, Inc ("Prevenio")Bridgewater, New JerseyJBT FoodTech
A provider of innovative food safety solutions primarily for the poultry industry as well as produce applications. Prevenio provides a pathogen protection solution through its anti-microbial delivery equipment that enhances food safety and integrity, and creates a safer work environment for its customers and their employees. This acquisition enhances the Company’s recurring revenue portfolio and furthers its investment in solutions that support its customers’ daily operations.
February 28, 2021StockAutoCoding Systems Ltd. ("ACS")Cheshire, U.K.JBT FoodTech
A provider of a central command solution for the integration of packaging process devices. The ACS acquisition extends the Company's capabilities in packaging line equipment and associated devices, including coding and label inspection and verification.
Each acquisition has been accounted for as a business combination. Tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their respective estimated fair values. The excess of the consideration transferred over the estimated fair value of the net assets received has been recorded as goodwill. The factors that contributed to the recognition of goodwill primarily relate to acquisition-driven anticipated cost savings and revenue enhancement synergies coupled with the assembled workforce acquired.
8


(In millions)
Urtasun(1)
Prevenio(2)
ACS(3)
Total
Financial assets$8.5 $8.1 $2.9 $19.5 
Inventories3.4 0.2 0.7 4.3 
Property, plant and equipment3.2 4.1  7.3 
Customer relationship (4)
11.5 41.0 3.7 56.2 
Patents and acquired technology (4)
6.0 17.5 3.4 26.9 
Trademarks (4)
2.2 0.7 0.8 3.7 
Deferred taxes(5.9)(15.5)(0.9)(22.3)
Financial liabilities(7.2)(3.4)(2.9)(13.5)
Total identifiable net assets$21.7 $52.7 $7.7 $82.1 
Cash consideration paid$44.2 $173.3 $16.8 $234.3 
Cash acquired4.8 3.5 1.1 9.4 
Net consideration$39.4 $169.8 $15.7 $224.9 
Goodwill (5)
$22.5 $120.6 $9.1 $152.2 

(1)The purchase accounting for Urtasun is provisional. The valuation of certain working capital balances, property, plant and equipment, intangibles, income tax balances and residual goodwill is not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). During the quarter ended March 31, 2022, the Company made no significant measurement period adjustments for Urtasun.
(2)The purchase accounting for Prevenio is provisional. The valuation of income tax balances, intangible assets and residual goodwill is not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). During the quarter ended March 31, 2022, the Company made no significant measurement period adjustments for Prevenio.
(3)The purchase accounting for ACS was final as of December 31, 2021.
(4)The acquired intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from four to twenty years. The intangible assets acquired in 2021 have weighted average useful lives of 14 years for customer relationship, 8 years for patents and acquired technology, and 17 years for trademarks.
(5)The Company expects goodwill of $0.7 million from these acquisitions to be deductible for income tax purposes.

9


NOTE 3. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill by business segment were as follows:
(In millions)JBT FoodTechJBT AeroTechTotal
Balance as of December 31, 2021$646.7 $38.1 $684.8 
Acquisitions1.3  1.3 
Currency translation(4.1)(0.1)(4.2)
Balance as of March 31, 2022$643.9 $38.0 $681.9 

Intangible assets consisted of the following:
March 31, 2022December 31, 2021
(In millions)Gross carrying amountAccumulated amortizationGross carrying amountAccumulated amortization
Customer relationship$307.3 $107.1 $309.3 $102.0 
Patents and acquired technology171.6 85.1 174.5 82.0 
Trademarks47.4 15.5 47.2 15.0 
Non-amortizing intangible assets10.5 — 10.6 — 
Other8.7 8.7 8.7 8.7 
Total intangible assets$545.5 $216.4 $550.3 $207.7 


NOTE 4. INVENTORIES

Inventories consisted of the following:
(In millions)March 31, 2022December 31, 2021
Raw materials $121.3 $101.0 
Work in process 75.7 59.1 
Finished goods 163.2 151.8 
Gross inventories before LIFO reserves and valuation adjustments 360.2 311.9 
LIFO reserves(51.9)(53.3)
Valuation adjustments(32.7)(29.5)
Net inventories $275.6 $229.1 


NOTE 5. PENSION

Components of net periodic benefit cost were as follows:
Three Months Ended March 31,
(In millions)20222021
Service cost$0.5 $0.6 
Interest cost1.9 1.6 
Expected return on plan assets(3.9)(3.9)
Amortization of net actuarial losses2.0 2.3 
Net periodic cost$0.5 $0.6 

The Company expects to contribute $13.1 million to its pension and other post-retirement benefit plans in 2022. The pension contributions will be primarily for the U.S. qualified pension plan. All of the contributions are expected to be in the form of cash. We have made no contribution to our U.S. qualified pension plan during the three months ended March 31, 2022.

10


NOTE 6. DEBT

The components of the Company's borrowings were as follows:
(In millions)Maturity DateMarch 31, 2022December 31, 2021
Revolving credit facility (1)
December 14, 2026$277.8 $282.9 
Less: unamortized debt issuance costs$(1.1)$(1.2)
Revolving credit facility, net$276.7 $281.7 
Convertible senior notes (2)
May 15, 2026$402.5 $402.5 
Less: unamortized debt issuance costs$(9.3)$(9.8)
Convertible senior notes, net$393.2 $392.7 
Long-term debt, net$669.9 $674.4 
(1) Weighted-average interest rate at March 31, 2022 was 1.42%
(2) Effective interest rate for the Notes (as defined below) for the quarter ended March 31, 2022 was 0.82%

Interest expense of $0.8 million recognized for the Notes included contractual interest expense of $0.3 million and the amortization of debt issuance cost of $0.5 million for the three months ended March 31, 2022.

Convertible Note Hedge Transactions

On May 28, 2021, the Company closed a private offering of $402.5 million aggregate principal amount of the Company's 0.25% Convertible Senior Notes due 2026 (the "Notes") to qualified institutional buyers. The initial conversion rate of the Notes is 5.8958 shares of the Company's common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $169.61 per share. The conversion rate of the Notes is subject to adjustment upon the occurrence of certain specified events.

On May 28, 2021, the Company paid an aggregate amount of $65.6 million for the Convertible Note Hedge Transactions (the "Hedge Transactions"). The Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Notes, approximately 2.4 million shares of the Company's common stock. These are the same number of shares initially underlying the Notes, at a strike price of $169.61, subject to customary adjustments. The Hedge Transactions will expire upon the maturity of the Notes, subject to earlier exercise or termination.

The Hedge Transactions are expected generally to reduce the potential dilutive effect of the conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the converted Notes, in the event that the market price per share of the Company's common stock, as measured under the terms of the Hedge Transactions, is greater than the Hedge Transactions strike price of $169.61. The Hedge Transactions meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore these transactions are not revalued after their issuance.

The Company made a tax election to integrate the Notes and the Hedge Transactions. The accounting impact of this tax election makes the Hedge Transactions deductible as original issue discount interest for tax purposes over the term of the note, and results in a $17.1 million deferred tax asset recorded as an adjustment to Additional paid-in capital on our Balance Sheet as of March 31, 2022.

Warrant Transactions

In addition, concurrently with entering into the Hedge Transactions, the Company separately entered into privately-negotiated Warrant Transactions (the "Warrant Transactions"), whereby the Company sold to the counterparties warrants to acquire, collectively, subject to anti-dilution adjustments, 2.4 million shares of its common stock at an initial strike price of $240.02 per share. The Company received aggregate proceeds of $29.5 million from the Warrant Transactions with the counterparties, with such proceeds partially offsetting the costs of entering into the Hedge Transactions. The warrants expire in August 2026. If the market value per share of the common stock, exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share, unless the Company elects, subject to certain conditions, to settle the warrants in cash. The warrants meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore the warrants are not revalued after issuance.

11


NOTE 7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income, net of tax, as of the Balance Sheet date. For the Company, AOCI is composed of adjustments related to pension and other postretirement benefit plans, derivatives designated as hedges, and foreign currency translation adjustments. Changes in the AOCI balances for the three months ended March 31, 2022 and 2021 by component are shown in the following tables:

Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation (1)
Total (1)
(In millions)
Beginning balance, December 31, 2021$(145.5)$1.8 $(53.7)$(197.4)
Other comprehensive income before reclassification 7.0 0.6 7.6 
Amounts reclassified from accumulated other comprehensive income1.6 0.3 (0.5)1.4 
Ending balance, March 31, 2022$(143.9)$9.1 $(53.6)$(188.4)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended March 31, 2022 were $2.0 million of charges to pension expense, other than service cost, net of $0.4 million income tax benefit. Reclassification adjustments for derivatives designated as hedges for the same period were $0.4 million of interest expense, net of $0.1 million income tax benefit. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended March 31, 2022 were $0.7 million of benefit in interest expense, net of $0.2 million income tax provision.
Pension and Other Postretirement Benefits (1)
Derivatives Designated as Hedges (1)
Foreign Currency Translation(1)
Total (1)
(In millions)
Beginning balance, December 31, 2020$(161.4)$(3.8)$(54.7)$(219.9)
Other comprehensive income before reclassification 2.9 5.0 7.9 
Amounts reclassified from accumulated other comprehensive income1.7 0.3 (0.5)1.5 
Ending balance, March 31, 2021$(159.7)$(0.6)$(50.2)$(210.5)
(1) All amounts are net of income taxes.

Reclassification adjustments from AOCI into earnings for pension and other postretirement benefit plans for the three months ended March 31, 2021 were $2.3 million of charges to pension expense, other than service cost, net of $0.6 million in benefit for income taxes. Reclassification adjustments for derivatives designated as hedges for the same period were $0.4 million of interest expense, net of $0.1 million income tax benefit. Reclassification adjustments for foreign currency translation related to net investment hedges for the three months ended March 31, 2021 were $0.7 million of benefit in interest expense, net of $0.2 million income tax provision.

NOTE 8. REVENUE RECOGNITION

Transaction price allocated to remaining performance obligations

The Company has estimated that $1.1 billion in revenue is expected to be recognized in the future periods related to remaining performance obligations from the Company's contracts with customers outstanding as of March 31, 2022. The Company expects to complete these obligations and recognize 86% as revenue in 2022, 13% in 2023, and remaining after 2023.

12


Disaggregation of Revenue

In the following table, revenue is disaggregated by type of good or service, primary geographical market, and timing of recognition for each reportable segment. The table also includes a reconciliation of the disaggregated revenue to total revenue of each reportable segment.
Three Months EndedThree Months Ended
March 31, 2022March 31, 2021
(In millions)JBT FoodTechJBT AeroTechJBT FoodTechJBT AeroTech
Type of Good or Service
Recurring (1)
$174.2 $48.7 $150.4 $41.5 
Non-recurring (1)
182.1 64.2 161.4 64.5 
Total356.3 112.9 311.8 106.0 
Geographical Region (2)
North America210.3 104.1 169.1 90.0 
Europe, Middle East and Africa89.4 5.3 83.9 11.5 
Asia Pacific36.0 2.7 41.3 3.3 
Latin America20.6 0.8 17.5 1.2 
Total356.3 112.9 311.8 106.0 
Timing of Recognition
Point in Time171.9 49.6 147.1 43.5 
Over Time184.4 63.3 164.7 62.5 
Total356.3 112.9 311.8 106.0 
(1) Aftermarket parts and services and revenue from lease and long-term service contracts are considered recurring revenue. Non-recurring revenue includes new equipment and installation.

(2) Geographical region represents the region in which the end customer resides.

Contract balances

The timing of revenue recognition, billings and cash collections results in trade receivables, contract assets, and advance and progress payments (contract liabilities). Contract assets exist when revenue recognition occurs prior to billings. Contract assets are transferred to trade receivables when the right to payment becomes unconditional (i.e., when receipt of the amount is dependent only on the passage of time). Conversely, the Company often receives payments from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Balance Sheet as Contract assets and within Advance and progress payments, respectively, on a contract-by-contract net basis at the end of each reporting period.

Contract asset and liability balances for the period were as follows:
Balances as of
(In millions)March 31, 2022December 31, 2021
Contract Assets$104.0 $94.4 
Contract Liabilities207.1 178.0 
Balances as of
March 31, 2021December 31, 2020
Contract Assets76.9 68.3 
Contract Liabilities132.9 123.8 

13


The revenue recognized during the three months ended March 31, 2022 and 2021 that was included in contract liabilities at the beginning of the period amounted to $83.5 million and $59.0 million, respectively. The remainder of the change from December 31, 2021 and December 31, 2020 is driven by the timing of advance and milestone payments received from customers, customer returns and fulfillment of performance obligations. There were no significant changes in the contract balances other than those described above.

NOTE 9. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share from net income for the respective periods and basic and diluted shares outstanding:
Three Months Ended March 31,
(In millions, except per share data)20222021
Basic earnings per share:
Net income $25.6 $27.0 
Weighted average number of shares outstanding32.0 32.0 
Basic earnings per share from net income$0.80 $0.84 
Diluted earnings per share:
Net income $25.6 $27.0 
Weighted average number of shares outstanding32.0 32.0 
Effect of dilutive securities:
Restricted stock0.1 0.1 
Total shares and dilutive securities32.1 32.1 
Diluted earnings per share from net income$0.80 $0.84 


NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities that the Company can assess at the measurement date.
Level 2: Observable inputs other than those included in Level 1 that are observable for the asset or liability, either directly or indirectly. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

Financial assets and financial liabilities measured at fair value on a recurring basis are as follows:
As of March 31, 2022As of December 31, 2021
(In millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets:
Investments$12.9 $12.9 $ $ $13.5 $13.5 $ $ 
Derivatives25.1  25.1  18.4  18.4  
Total assets$38.0 $12.9 $25.1 $ $31.9 $13.5 $18.4 $ 
Liabilities:
Derivatives$7.2 $ $7.2 $ $9.4 $ $9.4 $ 
Total liabilities$7.2 $ $7.2 $ $9.4 $ $9.4 $ 

14


Investments represent securities held in a trust for the non-qualified deferred compensation plan. Investments are classified as trading securities and are valued based on quoted prices in active markets for identical assets that the Company has the ability to access. Investments are reported separately in other assets on the Balance Sheet, and include an unrealized loss of $0.9 million and $0.5 million as of March 31, 2022 and December 31, 2021, respectively.

The Company uses the income approach to measure the fair value of derivative instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the change between the derivative contract rate and the published market indicative currency rate, multiplied by the contract notional values, and applying an appropriate discount rate as well as a factor of credit risk.

The Notes are not registered securities nor listed on any securities exchange but may be traded by qualified institutional buyers. The fair value of the Notes estimated using Level 2 inputs was $385.4 million as of March 31, 2022.

The carrying amounts of cash and cash equivalents, trade receivables and payables, as well as financial instruments included in other current assets and other current liabilities, approximate fair values because of their short-term maturities.

The carrying values of the Company's revolving credit facility recorded in long-term debt on the Balance Sheet approximate their fair values due to their variable interest rates.

NOTE 11. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Derivative Financial Instruments

All derivatives are recorded as assets or liabilities in the Balance Sheet at their respective fair values. For derivatives designated as cash flow hedges, the unrealized gain or loss related to the derivatives is recorded in Other comprehensive income (loss) until the hedged transaction affects earnings. The Company assesses at inception of the hedge, whether the derivative in the hedging transaction will be highly effective in offsetting changes in cash flows of the hedged item. Changes in the fair value of derivatives that do not meet the criteria for designation as a hedge are recognized in earnings.

Foreign Exchange: The Company manufactures and sells products in a number of countries throughout the world and, as a result, the Company is exposed to movements in foreign currency exchange rates. Major foreign currency exposures involve the markets in Western Europe, South America and Asia. Some of the Company's sales and purchase contracts contain embedded derivatives due to the nature of doing business in certain jurisdictions, which are taken into consideration as part of the Company's risk management policy. The purpose of the Company's foreign currency hedging activities is to manage the economic impact of exchange rate volatility associated with anticipated foreign currency purchases and sales made in the normal course of business. The Company primarily utilizes forward foreign exchange contracts with maturities of less than 2 years in managing this foreign exchange rate risk. The Company has not designated these forward foreign exchange contracts, which had a notional value at March 31, 2022 of $701.7 million, as hedges and therefore does not apply hedge accounting.

The fair values of our foreign currency derivative assets are recorded within other current assets and other assets, and the fair values of foreign currency derivative liabilities are recorded within other current liabilities and other liabilities. The following table presents the fair value of foreign currency derivatives and embedded derivatives included within the Balance Sheet:
As of March 31, 2022As of December 31, 2021
(In millions)Derivative AssetsDerivative LiabilitiesDerivative AssetsDerivative Liabilities
Total$6.6 $7.2 $10.6 $9.4 

A master netting arrangement allows counterparties to net settle amounts owed to each other as a result of separate offsetting derivative transactions. The Company enters into master netting arrangements with its counterparties when possible to mitigate credit risk in derivative transactions by permitting the Company to net settle for transactions with the same counterparty. However, it does not net settle with such counterparties. As a result, derivatives are presented at their gross fair values in the Balance Sheet.  

15


As of March 31, 2022 and December 31, 2021, information related to these offsetting arrangements was as follows:
(In millions)As of March 31, 2022
Offsetting of AssetsGross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetNet Presented in the Consolidated Balance SheetAmount Subject to Master Netting AgreementNet Amount
Derivatives$23.6 $ $23.6 $(3.1)$20.5 
(In millions)As of March 31, 2022
Offsetting of LiabilitiesGross Amounts of Recognized LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Presented in the Consolidated Balance SheetAmount Subject to Master Netting AgreementNet Amount
Derivatives$7.0 $ $7.0 $(3.1)$3.9 

(In millions)As of December 31, 2021
Offsetting of AssetsGross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetNet Presented in the Consolidated Balance SheetAmount Subject to Master Netting AgreementNet Amount
Derivatives$17.5 $ $17.5 $(7.3)$10.2 
(In millions)As of December 31, 2021
Offsetting of LiabilitiesGross Amounts of Recognized LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Presented in the Consolidated Balance SheetAmount Subject to Master Netting AgreementNet Amount
Derivatives$9.1 $ $9.1 $(7.3)$1.8 

The following table presents the location and amount of the gain (loss) on foreign currency derivatives and on the remeasurement of assets and liabilities denominated in foreign currencies, as well as the net impact recognized in the Income Statement: 
Derivatives Not Designated
as Hedging Instruments
Location of Gain (Loss) Recognized
in Income on Derivatives
Three Months Ended March 31,
(In millions)20222021
Foreign exchange contractsRevenue$(0.2)$(1.2)
Foreign exchange contractsCost of sales(0.9)0.9 
Foreign exchange contractsSelling, general and administrative expense0.5  
Total(0.6)(0.3)
Remeasurement of assets and liabilities in foreign currencies1.1 (0.3)
Net gain (loss) on foreign currency transactions$0.5 $(0.6)

Interest Rates: The Company has entered into four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025. These interest rate swaps fix the interest rate applicable to certain of the Company's variable-rate debt. The agreements swap one-month LIBOR for fixed rates. The Company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income (loss).

At March 31, 2022, the fair value of these derivatives designated as cash flow hedges were recorded in the Balance Sheet as other assets of $12.2 million and as accumulated other comprehensive income, net of tax, of $9.1 million.

Net Investment: The Company has entered into a cross currency swap agreement that synthetically swaps $116.4 million of fixed rate debt to Euro denominated fixed rate debt. The agreement is designated as a net investment hedge for accounting
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purposes. Accordingly, the gain or loss on this derivative instrument is included in the foreign currency translation component of other comprehensive income until the net investment is sold, diluted, or liquidated. Coupons received for the cross currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense, net on the condensed consolidated statements of income. Coupon interest from cross currency swap agreement recorded in interest expense, net was approximately $0.7 million for both the three months ended March 31, 2022 and 2021.
At March 31, 2022, the fair value of these derivatives designated as net investment hedges were recorded in the Balance Sheet as other assets of $6.2 million and as accumulated other comprehensive income, net of tax, of $4.6 million.

Refer to Note 10. Fair Value Of Financial Instruments for a description of how the values of the above financial instruments are determined.

Credit Risk

By their nature, financial instruments involve risk including credit risk for non-performance by counterparties. Financial instruments that potentially subject the Company to credit risk primarily consist of trade receivables and derivative contracts. The Company manages the credit risk on financial instruments by transacting only with financially secure counterparties, requiring credit approvals and establishing credit limits, and monitoring counterparties’ financial condition. Maximum exposure to credit loss in the event of non-performance by the counterparty, for all receivables and derivative contracts as of March 31, 2022, is limited to the amount drawn and outstanding on the financial instrument. Refer to Note 1. Description of Business and Basis of Presentation in Item 8. Financial Statements and Supplementary Data of the Company's most recent Annual Report on Form 10-K, for a description of how allowance for credit loss is determined on financial assets measured at amortized cost, which includes Trade receivables, Contract assets, and non-current receivables.

NOTE 12. LEASES

The following table provides the required information regarding operating and sales-type leases for which the Company is lessor.
Three Months Ended March 31,
(In millions)20222021
Fixed payment revenue$15.6 $16.3 
Variable payment revenue9.4 4.5 
Operating lease revenue$25.0 $20.8 
Sales-type lease revenue$0.7 $1.2 

Refer to Note 16. Related Party Transactions for details of operating lease agreements with related parties.

NOTE 13. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is at times subject to pending and threatened legal actions, some for which the relief or damages sought may be substantial. Although the Company is not able to predict the outcome of such actions, after reviewing all pending and threatened actions with counsel and based on information currently available, management believes that the outcome of such actions, individually or in the aggregate, will not have a material adverse effect on the Company's results of operations or financial position. However, it is possible that the ultimate resolution of such matters, if unfavorable, may be material to its results of operations in a particular future period as the time and amount of any resolution of such actions and its relationship to the future results of operations are not currently known.

Liabilities are established for pending legal claims only when losses associated with the claims are judged to be probable, and the loss can be reasonably estimated. In many lawsuits and arbitrations, it is not considered probable that a liability has been incurred or not possible to estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no liability would be recognized until that time.

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Guarantees and Product Warranties

In the ordinary course of business with customers, vendors and others, the Company issues standby letters of credit, performance bonds, surety bonds and other guarantees. These financial instruments, which totaled $172.6 million at March 31, 2022, represent guarantees of future performance. The Company has also provided $6.4 million of bank guarantees and letters of credit to secure a portion of its existing financial obligations. The majority of these financial instruments expire within one year and are expected to be replaced through the issuance of new or the extension of existing letters of credit and surety bonds.

In some instances, the Company guarantees its customers’ financing arrangements. The Company is responsible for payment of any unpaid amounts, but will receive indemnification from third parties for ninety-five percent of the contract values. In addition, the Company generally retains recourse to the equipment sold. As of March 31, 2022, the gross value of such arrangements was $0.6 million, of which the Company's net exposure under such guarantees was less than $0.1 million.

The Company provides warranties to certain of its customers based on standard terms and conditions and negotiated agreements. The Company provides for the estimated cost of warranties at the time revenue is recognized. Cost of warranties includes an estimate for products where reliable, historical experience of failure rates, as well as the related costs in correcting a product failure warranty claims and cost exist. The Company also provides a warranty liability when additional specific warranty costs are identified. The warranty obligation reflected in other current liabilities in the consolidated Balance Sheet is based on historical experience by product and considers failure rates and the related costs in correcting a product failure. Warranty cost and accrual information were as follows:
Three Months Ended March 31,
(In millions)20222021
Balance at beginning of period$12.7 $11.5 
Expense for new warranties2.7 3.7 
Adjustments to existing accruals(0.1)(0.2)
Claims paid(3.0)(3.2)
Translation(0.1)(0.2)
Balance at end of period$12.2 $11.6 

NOTE 14. BUSINESS SEGMENT INFORMATION

Operating segments for the Company are determined based on information used by the chief operating decision maker (CODM) in deciding how to evaluate performance and allocate resources to each of the segments. JBT’s CODM is the Chief Executive Officer (CEO). While there are many measures the CEO reviews in this capacity, the key segment measures reviewed include operating profit, EBITDA, adjusted when applicable, and EBITDA margins.

Reportable segments are:

JBT FoodTech—provides comprehensive solutions throughout the food production value chain extending from primary processing through packaging systems for a large variety of food and beverage groups, including poultry, beef, pork, seafood, ready-to-eat meals, fruits, vegetables, dairy, bakery, pet foods, soups, sauces, plant-based meats and juices.

JBT AeroTech— supplies customized solutions and services used for applications in the air transportation industry, including airport authorities, airlines, airfreight, ground handling companies, militaries and defense contractors.

Segment operating profit is defined as total segment revenue less segment operating expenses. The following items have been excluded in computing segment operating profit: corporate expense, restructuring costs, pension expense, other than service cost, interest income and expense, and income taxes. See the table below for further details on corporate expense.

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Business segment information was as follows:
Three Months Ended March 31,
(In millions)20222021
Revenue
JBT FoodTech$356.3 $311.8 
JBT AeroTech112.9 106.0 
Total revenue469.2 417.8 
Income before income taxes
Segment operating profit:
JBT FoodTech39.9 41.5 
JBT AeroTech