JBT Marel Corporation (JBTM) Earnings Call Transcript & Summary

Vice President of corporate development and investor relations, Kedric Meredith.

Well, hello. Welcome to JBT's 2022 Investor Day. I'm Kedric Meredith, JBT's Vice President of Corporate Development and Investor Relations. I've been with JBT since 2018 and on behalf of the entire team, I'm really excited to host you here in New York for those who are with us as well as those who are streaming live on the webcast online. Before we get started, I need to make some important announcements. In today's presentation, we will be using forward-looking statements that are subject to the safe harbor language in this morning's press release. 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 measures can be found in the Investor Relations section of our website. Today's presentation materials are also being made available on our website as well as a replay of the webcast, which will be available approximately 48 hours after the event concludes. Okay. For today, the presentation we will provide -- an overview of the business. We'll introduce our exciting digital strategy. We'll establish some multiyear growth and financial targets for JBT and offer perspectives on the portfolio strategy. So we'll begin with Brian and his presentation. We'll then discuss FoodTech. We'll discuss our digital strategy. We'll then take a 10-minute break. And when we return, we'll discuss our AeroTech business, and then we'll finish up with Matt, the financial discussion, and then we'll take Q&A. On Q&A, all questions must be submitted through our online portal. So for those of you in the audience with us, you should see a QR code in front of you. If you scan that QR code, you can submit your information and you can submit your questions, and certainly, we will get them, and we will address them through the portal. [Operator Instructions]. As well as we -- for sustainability purposes, we have not printed any documents. But the presentation materials are available on our website should you want to follow. So before we get started. We've got an exciting video that I -- we'd like to play. After that video, we'll welcome Brian Deck, JBT's President and CEO. Thank you. [Presentation]

Please welcome the President and Chief Executive Officer of JBT, Brian Deck.

Thanks, everybody, for joining us today. We're really excited to be able to tell you about JBT and our story. I'm Brian Deck, I've been at JBT for a little over 8 years, first 6-plus years as our CFO and the last 2 years or so as our CEO. When you think about JBT, it's really about making better use of the world's precious resources. And we do that by offering solutions to our customers to support them in their success. In that regard, we do that with sustainable solutions. Let's move on. So JBT at a glance. JBT was founded in 1884 by a gentleman of the name of John Bean. He really was, really one of the innovators when it comes to the industrialization of food production. He founded a company called Food Machinery Company, FMC. Many of you may know that name FMC over the years, it became a conglomerate, investing in things like agricultural chemicals, energy, mining as well as adding the AeroTech assets. Ultimately, through a series of transactions, JBT was spun off in 2008 as a public company. And at that time, it was about a 60% FoodTech business, 40% AeroTech. And since then, JBT has grown to about 75% on the FoodTech side. In terms of our management, I'm really pleased with the management team we've put together here today. Lots of deep industrial experience, including many years at JBT. You'll hear from many of them today. Carlos, Bob and Dave. They run the 3 businesses. And Kristina and Matt you'll hear from as well. Okay. When I take a step back and look at what we have accomplished since we originally introduced our Elevate strategy several years ago. What we really wanted to accomplish is growing the business, growing margins and investing capital, diversifying our portfolio and really creating a strong organization. So looking at the accomplishments, we've essentially doubled the company. We've added over 300 basis points of margin, and that's through the cycle, including COVID. Pre-COVID, it was north of 400 basis points. We significantly added to our recurring revenue base, which is a huge focus for us. And we -- cash flow more than 130% collectively during that time. And the thing that's most exciting to me is what we've done with our portfolio. We've added 20 acquisitions, 18 of which were for FoodTech. And we've had significant investment in our new product development. So along -- by doing that, we significantly added capabilities in support of our customers, adjacencies that allowed us to be a stronger partner for them. Meanwhile, we invested significantly in the refresh of AeroTech's business and more recently investing in things that are really important to their customers, electrification, automation and defense. Organizationally, we adopted a lean strategy, a lean culture, including our JBT business systems. We significantly added to our strategic sourcing capabilities, our supply chain resources to be able to take advantage of being a larger company. And we established an ESG program and DEI program as part of that. So today, we're here to introduce our Elevate 2.0, digitally enabled growth. It's about a digital transformation in support of our customers, but it's more than that. It's leveraging all the things that we've done under the original Elevate strategy, adding on the digital component as well as focusing some of the new things that are important to them, automation and sustainability. So let's get into it. Key takeaways today. We're very excited about our vision to become a food tech pure play. FoodTech has really excellent broad participation in the food end market, and it has compelling macro growth behind it. And most importantly, we've had excellent, innovative core technology that supports our customers in everything they want to do. And that's further supported by our application knowledge. We've got application engineers, food scientists, everything in support of what our customers do to day-to-day. Our Elevate 2.0 strategy, I think you'll find compelling today with that support from the digital. We are a growth company. We've been investing over the years. We'd like to continue to do so successfully. We maintained a strong balance sheet throughout by reach of our disciplined approach. And our cash flow has been good, and we're going to continue to cash flow. So let's talk about that pure-play food tech strategy. We're very excited, as I mentioned, to talk about that, becoming the premier food and beverage technology solutions provider. And Elevate 2.0 will further bolster that both organically and inorganically and build the most compelling portfolio. As part of that, we are exploring strategic alternatives for AeroTech. As many of you know, AeroTech is a leader in their end markets. But we feel that this focused strategy for them will allow them to also grow significantly outside of the JBT footprint. We're considering a full range of strategic alternatives. We have many options with the goal of identifying the best value creation for shareholders. As such, we expect to complete our assessment in the front half of 2023. Meanwhile, it's allowing AeroTech to participate in the recovery. And you'll hear from Dave, it's a very compelling story in terms of our potential growth in that business. In terms of our financial framework 2025, Matt will get into this. But at the highest level we're looking at high single-digit revenue growth rates for both Food and AeroTech. Continued margin expansion, getting to north of 21% for Food, north of 14% for Aero. Free cash flow conversion, we expect to continue in 2022 as an investment year, thereafter significant cash flow. We will continue to focus on M&A, on value-creating opportunities for our customers. And lastly, ROIC it's a capstone metric for us. We expect to get to north of 15% organically. So FoodTech pure-play strategy. Let's talk about precisely what that means. In terms of where JBT sits within the value chain, I think this is well established. But just as a reminder, JBT is positioned with the global food and beverage producers, upstream to where the consumer decides to eat or drink. And what that means is, in the short term, like we saw in 2020 with the pandemic as consumers shift from full-service restaurants to the retail side, JBT was there to support our customers in that regard. And in any case, regardless of where the consumer does eat or drink, we'd get to benefit from secular and cyclical trends as they change their eating habits. That position in the value chain is -- really provides some resiliency. We'll talk about that a little bit more what that means. Okay. Diversification for FoodTech is something we really strive to do over the last several years, and we've really made significant progress. If you look at the end markets we participate in, poultry, meat, seafood, it's our largest category, really strong positions there. Beverage is a huge category coming off of our base of our juice business. We expanded significantly into that. It's a really attractive category, lots of investments, a lot of the consumer changes in this regard. Ready meals is a really fast-growing industry. We've got some really nice technologies that support that. On the top right there, in terms of all other, if you will, that includes multi categories, but it also includes our AGV business, which does serve multiple categories. And therefore, we put it there. And that's a little bit over 50% of that category, just to give you a feel for the size of that business. And then along the bottom, some of the really great growth trends we've seen recently, food and vegetable, pet foods, sustainable foods as well as nutraceutical and pharmaceutical, some really nice adjacencies for our technology. In terms of the solutions themselves, I'm not going to go through all of these. However, it's really important to understand the breadth of not only our end market participation, but also our equipment, whether it's preservation, packaging, freezing, cooking, you name it. We feel we've got the broadest set of solutions. And equally as important is our process knowledge and how to connect these solutions to the end markets for the benefit of our customers. We really understand the needs of our customers, we really understand the needs of food. JBT knows how the sausage is made, literally. In terms of the geographic presence, you see we're a little over 50% in North America. And this is based on where our end customers are, in terms of the orders and where they end up at. North of 50% for North America, and you can see the other locations. Three critical points to understand about this: first and foremost, this footprint is really meaningful when you're dealing with the global customer base that we have. Food is everywhere. And our local presence for service and support is extraordinarily important to servicing those customers. This equipment tends to run 16, 18 hours a day, lots of high moving parts. And uptime is critical. So our ability to be on the spot as needed with parts or service is extraordinarily important, and it is barrier of entry for many. The second point I would make is, in these same regions, we have technology centers. These technology centers allow our customers to show up with their food stuffs and test out the flavor, the look, the feel, the taste, the color, the moisture content, production scale equipment in preparation and understanding of how that food will come out on the other end. The third point to make is when it comes to our M&A strategy, a lot of times what we do is invest in core technology for regional businesses that struggle to go international because of the first point I made on service and support. It is hard for regional businesses to globalize. And we do just that with them. In terms of some of the market drivers, protein continues to be a very strong trend globally not just in the developed markets, but in the developing markets, particularly Asia as the per capita consumption protein continues to increase. Food safety is a critical issue for our customers and increasingly critical. And not just the cost of a recall, but really more than anything, the brand reputation is very important, and it's a high-risk proposition. We all know about the labor challenges out there. We'll talk more about that. Food waste is also increasing, an important issue. And not just food waste, but packaging waste, et cetera, everything around that. We've got some great solutions. We've got some really nice examples on that with Carlos and Paul -- excuse me, Carlos and Bob. Consumer preferences are constantly changing. That's a good thing because all those changes require investment, so whether it's convenience food, sustainable foods, clean labels, all that's good for JBT and our customers. Automation, a key theme for today, again you'll see many examples of this later. Manufacturing is facing a real critical shortage. And when you think about food companies, food factories, that's even one of the toughest value propositions from an employment perspective. It tends to be cold. It tends to be a wet environment. So it's increasingly difficult for our customers to find labor. And JBT offers some nice solutions in that regard. The other thing I would point out is when you think about engineering resources, JBT is very much an engineering resource company. And our customers continue to struggle in this regard in terms of being able to spend as much time as they'd like to on this. So JBT brings those solutions together by having connected solutions, allowing us to take the burden off of making things flow properly in support of them. It allows them to focus on the things that are important to them, new product development, marketing, on-the-floor production. So again, you'll see some nice examples today. We get asked a lot, what does your automation portfolio look like? And the way we think of it, it is a continuum in terms of the highest labor automation solutions versus more modest players. And of course, we always talk about our broad value proposition, which is not just automation, it's yield, it's throughput, it's safety, it's capacity. All those things are critically important. However, looking through the lens of what is the largest driver of the investment? We took a look at our orders and our product lines as to say, what is the primary driver of those investments. And through that lens, about 40% of our business is key critical technology for -- and the number 1 item for the choice of our customers. The other 60% is more about continuing expanding our product line, a new replacement line. But in the meantime, they also get some automation associated with that, just typically not the number 1 driver. So -- but again, a big part of our portfolio is dedicated to supporting our customers in this regard. Okay. In terms of the sustainability goals, consumers are increasingly concerned about the food they eat and the things around that and the supply chain associated with that. JBT has many solutions to support them. Food waste is a huge issue. So we provide solutions that provide the best yield on the factory floor, but also shelf life at the consumer level. So having good preservation solutions is really critical to the extent that we can add to that safely, it's a big benefit to our customers and their customers. Water/Energy usage is a huge issue as well. And being able to measure and monitor that for the benefit of them so they -- in understanding JBT has the best solutions out there as it relates to water and energy consumption. And our digital will help them monitor that for their ESG benefit. Packaging waste is a huge issue. JBT has got some nice solutions that allows them to reduce debt as much as 70%. And lastly, particularly in recent years, the development of sustainable foods continues to be a nice trend, whether that's in alternative meats, plant-based beverages and even cellular-based meats is becoming an increasing -- the interesting area. And we participate in all of those. Why do customers choose JBT? As I mentioned, it's that broad food application knowledge, that expertise, the application engineering, food scientists, and that comes along with food safety expertise as well. But really critically is the equipment and solutions surrounding that itself our innovative core technology supporting that value proposition that I just mentioned automation, throughput, et cetera, is really critical. The global service and support is that third leg in support of our customers. And then those [ fuller ] solutions, as we added to our portfolio, allowing us to provide more things to our customers, supports them and their engineering and their ability to better monitor, manage and have productivity on their shop floor. What is all that accumulated in? Our presence, our portfolio, the macro trends has really supported JBT and the investments we made in new product development. Commercially, we've been doing really well. We're winning in the marketplace to 29% growth 2021 versus 2020 and approaching 20% organically versus our prior high in 2019. And you can see the backlog that's gone along with that to support it as we entered 2022, our highest backlog ever. Recurring revenue is a great story about JBT. So I think we're really proud of the progress we've made in this area and how it supports JBT and its resilience. You can see the trends for our recurring revenue business hitting 50% of mix in 2020 and now just under 50%. And you can see in the middle that even within our recurring revenue, there's some diversity parts and consumables, service, et cetera. And it's really on the support of that installed base and our service technician network, 40,000 strong on the equipment side. And what excites me the most with our backlog that we have going on today and the things that we're going to get out into the field over the next couple of years, with this great position we're in, it creates a long tail of recurring revenue. Let's talk about our Elevate 2.0 strategy. It's really 4 things: organic growth, our digital transformation, margin enhancement and acquisitions. We'll talk about each of these. In terms of organic growth, we have the ability to continue to penetrate these end markets with our technology and our application knowledge. We've seen that in recent years with the development of alternative food and beverage space. Pet foods has been a huge adjacency growth opportunity for us as well as pharmaceutical and nutraceutical. We've been very successful in this, and there's more to come. But new product development has been really the key for us as part of our Elevate 2.0 -- excuse me, our original Elevate strategy, a big part of that was investing in R&D and new product development. And you can see to the right here, many examples of the things we've just introduced in the last few years. And as I mentioned, it's a broad value proposition. It's not just yield, it's not just automation. It's not just throughput. We work hand-in-hand with our customers to understand their critical needs and product development and introduce those to the marketplace in support of those needs. We've got continued opportunities in the cross-selling, investing into developing geographies, in particular Asia. And last, but certainly not least, we're going to leverage our digital offering. Let's talk about that. Our digital -- JBT's digital transformation. We worked the better part of the last year behind the scenes working with our key customers and identifying areas of specific actionable improvement ideas with them and iterating that. I don't want to take from Kristina's presentation because she's got some really nice information on this and how this all works. But rest assured we've done our homework on this. And in terms of monetization levers, there's really 3 areas: first and foremost, it is going to be the aftermarket and any subscription revenue that comes along with that. But we feel there's also equipment pull-through. As our value proposition increases because of the visibility that our customers are going to have on the performance of their machines, it really adds to our ability to sell that equipment. And then over time as we develop this ecosystem, we feel that there's additional things we can add on to that digital infrastructure, additional software packages, traceability, perhaps lab services, we'll see. But having that ecosystem and that engagement with our customer is really critical in order to do that. We do have continued margin enhancement opportunities. On the lean side and our process business, JBT's systems is something we adopted as part of our original Elevate strategy. And it's about a data-driven, disciplined process with a regular cadence for a review of performance operationally and otherwise, with specific KPIs that we manage to and a set of tools underneath supported by our lean efforts to identify those issues and having a real problem-solving mentality, root problem solving activity. On the supply chain side, it's been a good story. We've added a lot of resources over the years, really trying to get the benefit of JBT's scale. We've got over 30 facilities across the globe. And we saw some nice success in this in 2018, 2019 and even 2020. In 2021, we had to shift our focus, saving money instead to continue of supply with some of the challenges we see in the marketplace and really the uncertainty more than anything. That's really what we're focused on over the next year or so. That said, lots of opportunity to grow margins in this regard. Supply-based consolidation, make versus buy. And just to give you a feel for that, what that means that we find in some of our factories, we're doing some really low value-added work where we should be off putting that to some of our vendors that can do that better, allowing us to focus our capacity utilization on the higher value-added items. We're growing a lot. We need that capacity. So to the extent that we can put some of those simple processes off, it allows us to grow and add to our margin. Value engineering and component standardization is also a large opportunity for JBT. Moving more to configure to order for our parts, allowing us to leverage those same parts across multiple product lines. A lot of engineering involved with that, a lot of effort. But when you do it, it allows you to consolidate that supply base. And best cost country. So once you find a good vendor that can save you 20%, 30% off of those parts, putting more through that, whether or not it's Asia, whether or not it's Eastern Europe, whether or not it's a core region for us, U.S. and Europe, we see some of that, too, opportunity there. Over the next several years, it's a little bit hard to tell in this environment right now is to the ramp-up pace of that, but we are confident that there's 200 basis points of capability there. Capital allocation is an important part of the JBT story, our growth story. First and foremost, our capital investments in digital, another CapEx investments that support lowering our cost in our factory floors or otherwise or provide some other areas of support for growth. That's number one. That tends to be our highest ROIC opportunity. We'll continue to support the dividend. But graphically, you can see on the right, the lion's share of the excess capital is going to go to M&A. Again, continue to develop those adjacencies in support of our customers and their needs, their fuller line solutions and continue to penetrate those end markets. We will do selective share repurchases, more than anything to offset management dilution. but perhaps being opportunistic as well. So speaking of acquisitions, we've got a great track record in the things that we've done. And we're really focused on 2 areas. First, as I mentioned, the adjacencies where we've got a particular right to play in support of our customers. And you're going to see some really excellent examples today of how we've integrated them into the JBT system and provided some real growth opportunities in connecting some of these pieces together. But also, we look at new business models that support, in particular, our recurring revenue model, AutoCoding as a software company on label verification. Prevenio, a great recurring revenue business. But at its core, what we're looking for is good, key core technology that JBT can leverage throughout our system, either globalize it or put it within our overall product offering. That's the key. In terms of financially, how we think about this, we have great discipline around our acquisition strategy. We have multiple metrics that we look at EPS accretion, IRR, but the capstone is ROIC, cash ROIC. And the way we think about it is for some of the smaller tuck-in-type deals, your bolt-ons a 3-year double-digit ROI target is what we strive for. And for the larger deals, more of a 4- to 5-year target for double-digit ROIC. That discipline has served us well. In terms of people, I'll start with JBT and our culture and our ONE JBT sort of core values. It's about integrity, accountability, teamwork, continuous improvement, all on the foundation of supporting our customers. When it comes to talent, you've got to have a good value proposition, making better use of the world's precious resources, beating the world, finding great sustainable new solutions. That's a great value proposition from a people perspective. But you have to couple that with flexibility on their jobs in today's market. You've got to provide development opportunities. And you've got to have a great environment for embracing diversity culturally and listening to those different points of view. When you do those things right, it really significantly drives employee engagement, which leads to customer engagement. And in that regard, we feel we've got a great environment. Okay. To wrap it all up before I hand it off to Carlos. Just taking a step back and thinking about JBT's holistic business model as I mentioned, it's that application knowledge, interfacing with that core technology and knowing how to support our customers and how they product develop, how they go to market, how they do it safely. And then historically, that customer care component to it as well. But now with the digital transformation, the digital tools that we're going to bring to the table, it just significantly adds to this value proposition in the sense that now our customers are going to have full visibility into this and interface and understand and it makes us easier to do business with, and they're ready for this. We're ready for this. So we couldn't be more excited about providing this holistic business model for our customers as we go from here. We've got such an amazing foundation of technology and expertise and wrapping it in a digital solution to support that service and [ years ] doing business with and transparency on their own business, we think, is really going to drive engagement. So with that, we're going to hand it off to Carlos and Bob to talk about -- more about FoodTech and some of the specifications that you heard me talk about. Just to give you a little feel for FoodTech. There are 2 divisions within FoodTech, our diversified food and health and our protein division, which is led by Bob. You're going to see there's a lot of interface between the 2 businesses and a lot of sharing of end markets and even sharing a technology. So it really is a holistic business within FoodTech. So with that, I'm going to hand it off to Carlos Fernandez. Thank you.

Please welcome the EVP and President of DF&H Carlos Fernandez; and the EVP and President of Protein, Bob Petrie.

Good afternoon to everyone. My name is Carlos Fernandez. I've been with JBT over 20 years and 4 years in the current role. What you see up in the screen is the performance of the FoodTech business over the last 8 years. You can see the significant growth every year, except for the COVID year. We also want to highlight the improvement on the margin side. And even on the COVID year, you see the resilience of the business, driven by our recurring revenues. I want to call out that the growth is really driven by both divisions through strong organic growth as well as a number of acquisitions we've done over the last few years. But what's really, I think, the key takeaway, the positive news is the extremely large runway that we have ahead of us in terms of growth in the Food space. I want to show you a quick video. You're going to see some products, you're going to see some applications that we do in diversified Food & Health. [Presentation]

So over the next few slides, I'm going to give you a feel of what we do in diversified food and health, but I'll also be talking about FoodTech. There's multiple crossovers between both divisions. And I think that's a key takeaway of today's discussion, the synergy and the strength that we have as a as a Food group. So what do we do in diversified food and health? We do a wide range of food applications for humans. We also do food for pets. We also do nutraceutical products, and we have a small play also in pharmaceuticals. Some of you might remember the old name of the division. We used to call it liquid foods. If you look at the range of products that we do today, we have clearly outgrown our original name. You can see we're doing from formula. We do juice, we do fresh fruit. We do [ ketchup ] we do trace with different applications in different products inside. We do dairy and so on. So it calls to the strength and the diversity of our division. In addition to our traditional segments, which Brian talked about, I want to highlight 4 of the major growth opportunities that we have. I want to start with plant-based. I think it's a category that has been growing significantly over the last few years, and we expect it to keep growing. And both divisions have a wide range of products and applications that we can offer into plant-based, and I'll cover a few examples as I go through my presentation today. Another one will be ready meals. We can help customers all the way from preparation, packaging as well as sterilization of those products. Another one will be pet food. Another good example of how both divisions can play in a very meaningful way on this growing segment, both now and into the future. And then Pharma, smaller base, as I said before, but we see a tremendous growth opportunity for JBT in years to come. I want to also call out the total available market with $10 million -- sorry, $12 million of equipment and $8 million of customer care. Obviously, not all of this is probably immediately available for us, but it talks to the size of the opportunity that we have ahead. I also want to give you a feel for the equipment that we produce. So if we start with our processing equipment group, we do have operators, we do sterilizes for inflow products. We do fruit extraction equipment. So some of the products that we'll do through our processing group will be things like mango puree, will be orange juice, will be tomato paste that comes from concentrate. As we go into our filling and preservation equipment, we do filling and closing of [ rigid ] containers. And then we'll do in-container sterilization, both in batch as well as think about tuna in a rigid container. On the fresh group, I'll be covering HPP, which is the picture you have up there, later in the presentation. But I want to highlight a couple of other things that we do. We do the coatings, the access to preserve fresh fruit that will go from one region to another, and we'll get to the supermarket in the best possible quality for the end consumer. We also do cleaning flotation and cutting equipment for fresh vegetables. So imagine vegetables in the bag, imagine fresh-cut ready-to-eat salads, that's the type of end products that we do in our fresh group. And then in our Packaging group, we do tray labeling -- tray sealing. So I'm not going to get into all the details here, just a couple of good examples later on. But imagine anything on tray, from fresh berries, seafood, meat, fish, et cetera. And then we'll also do the verification of those trays at the end of the line. Here's the value that we drive for our customers. Brian already covered most of it. So I'm not going to repeat what he said. But I want to call out a few things that are really important for all of you to understand. First of all, a sort of tremendous process knowledge and application knowledge in the food space. Another one would be our equipment uptime as well as setting up the right balance between yield and quality for our customers. And how we do that is through our global service presence. And that service presence is not only mechanical and electrical, that service presence goes to our technology centers and it goes into a group of food scientists that we have around the world. I also want to highlight our customer-centric solutions. We are building new business models to have flexibility with our customers and allow them to run with a different scheme, for example, a [ pay per ] bottle type of concept. Lastly, I want to highlight that after the pandemic, in recent discussions with a number of customers and given the supply chain issues that the world has suffered, I think they're looking at their suppliers much more strategically than before. And if you think about JBT, you think about our expertise, you think about our scale, you think about our debt. I think we check all the boxes to be the right partner for those food processing companies. What you see here is a great example of how we engage with our customers all the way from pre-sale to an inquiry, all the way to a final commissioning. So we will receive an inquiry from customers. We'll get a group of application engineers involved, we'll come up with the right configuration, the right layout and the right solution. Once we get the order, it will go into engineering, manufacturing. And then we'll do the installation, the commissioning, the training as well as the process validation of that solution. And then what I think is really exciting both for us and for our customers is all the aftermarket range of solutions that we offer. And think about those equipment being in the field for at least 8 to 20 years. Quite frankly, in some cases, we have equipment running for 30, 40 years in the field. And we'll do the service, we'll do the parts, we'll do the maintenance, we'll do the upgrades, and we'll do the retrofits. And that opportunity is between 2x to 4x the size of the initial purchase. And this is an area where we feel we can even do better. And Brian talked about it. And then Kristina will get into the depth of it. But it's a digital solution, combined with the aftermarket program that we can drive tremendous value to our customers and also tremendous value to JBT. Brian also covered this. There are multiple market trends that are happening, all the way from organic to plant-based, convenience, healthy taste products. All of those are great opportunities for us. We have a very strong R&D program. We listen to our customers. We listen to the market, and you're going to see some good examples of automation solutions of sustainable packaging as well as new R&D products that we're launching to the industry. What you have up in the screen, I think, demonstrates tremendous value that JBT brings through both acquisitions as well as R&D. We purchased Proseal in 2019. Proseal does tray sealing. And then we purchased AutoCoding Systems in 2021. As Brian mentioned, ACS provides the software for the label verification. So we're bringing one solution together for the customer where the trays will get sealed and then those trays will get verified at the end of the line. But in addition to that, we've done an R&D project in which we've done a case packer. And what the case packer does puts those trays at the end of the line into a box. So there's no manual or human intervention. So it really checks all the boxes that our customers are looking for. It increases automation, it drives efficiency, cost savings and higher yields for our customers. Sustainability has always been part of what JBT does. It starts with our mission statement, which Brian talked about it, making better use of the world's precious resources. But then it goes into the different programs that we have. So we have heat recovery systems. We have water-efficient recovery systems. We do cleaning place solutions for the equipment. So the cycles are shorter, the uptime is larger, and then we minimize the use of water and chemicals to clean them. We'll reduce -- will help reduce food waste, and we do that through the yield improvement, but we also do that through the recovery of byproducts or ingredients. And then I want to highlight some of the work that we've done with a number of partners in terms of packaging. In the traditional trays that you can find in a supermarket, we can reduce more than 70% of that plastic. And we'll do that using trays that are made out of cardboard, trays that are recyclable and even trays that are combustible. Another thing I want to highlight is the development that we're doing in new applications. So you're going to see a couple of good examples in both cell production as well as plant-based applications. So on cell production, we're very proud of the R&D work that we've done. Everyone, I think, here has probably seen the recent news of a number of companies that are entering the segment. And we've been working on this for a number of years. And it goes into new equipment that we've launched like bioreactors, but it also calls into the R&D engineering knowledge that we have to serve our customers. So we will be able to do a complete layout of a factory. We can help the customer define what the right equipment is. We will help with the installation and commissioning of that equipment and then we'll also help with the validation. Another thing I would want to highlight here as I start my presentation is the strength between both divisions. So if we look at protein side, they have tremendous knowledge on portioning, on cooking and on freezing, which can very well be used on these type of applications. I want to wrap up this slide with a key comment. This cell production space is where USDA and FDA meet. And that is what JBT can help our customers with on both. What you see here is a quick schematic of a plant-based beverage. But what you see up in the screen also is a great example of the depth and the strength that our FoodTech business has. We can help customers all the way from ingredient preparation, mixing and batching solutions. And then our customers can decide if they want to go AsepTech. So we will do the [indiscernible] sterilization and we'll do the aceptic filling feeling. So a good example of this will be oat milk in a bottle that you'll buy in a supermarket. But we can also go the non-aceptic route. So we will do the filling non-aceptic and then we will do the shelf life sterilization either through a batch or a continuous system. So a good example of this for example will be soya milk in a glass bottle, which is a very popular drink in Asia. I want to highlight that we have a number of references and installation on plant-based. This is not something new for JBT. What we are doing for our customers is defining what type of product the customer wants. And through a range of references, installation as well as our technology centers, we can define what is the right setup for that new product that they want to launch into the market. And to wrap up my presentation, I want to give you another good example of the value that JBT drives between acquisitions and R&D. We acquired Avure in 2017. Avure does high-pressure processing. HPP is really a cool technology. If you think about HPP, it's the one technology that is the closest to fresh. You do not apply heat, you do not use chemicals, you do not use preservatives, but it extends the shelf life of our product. Think about, for example, guacamole, it's the perfect application for HPP. Now unfortunately, HPP has a limitation. Typically, you only use individual packages. What JBT has brought to the table is an R&D program where we'll be HPP in liquids, particularly juices in bulk, and then you can do the filling in whatever type of end container that you want. So I think it's another great example of our R&D program focused on sustainability. And it can drive additional solutions for our customers. So with that, I'm going to pass it on to Bob.

Okay. Thank you, Carlos. My name is Bob Petrie, I'm the Executive Vice President and President for our protein division. I've been with the business around 13 years, and I've been in this role for -- since last year. Today, what I'm going to do is give you an overview of what we do in protein. I'm going to share with you some of the exciting automation projects that we have ongoing. And also I'm going to wrap up -- sorry, I'm going to wrap up with a summary of our strategic initiatives for all of FoodTech as part of Elevate 2.0. But first, we're going to take a look at a short video. [Presentation]

Okay. For those of you that were wondering what that green product was in the video, I can assure you that was not chicken, okay? It was frozen -- it was peas being individually quick -- frozen on our freezing technology. So this first slide shows our broad participation in the end markets within protein. And the first thing you'll notice is that with our division called Protein, we do actually participate in many more markets that are not traditionally associated with protein. And the reason for that is because of our market-leading position in freezing technology. We basically freeze almost every kind of food. Obviously, poultry, red meat and fish incredibly important segments for us, but we also participate in ready meals and prepared foods and also bakery. And as Carlos mentioned, we do have a nice crossover with diversified food and health in the segments of pet food and also in fruit and veg. We're also exposed to the very high growth segment of plant-based meat alternatives. We estimate our total addressable market to be around $20 billion, with about half of that in recurring revenue. And of course, that means there is plenty of room for us to grow either organically or through M&A. This next slide shows how we look at our portfolio in terms of our customers' processes. So we'll start with primary processing. And here, we're talking about poultry primary processing. And our participation here starts after the killing and evisceration stages. And it starts with chilling. We have a market-leading position with our chilling technology. We also have a market-leading position in the delivery of antimicrobials through Prevenio. We also have cut-up and de-boning equipment, and we also have equipment for automatically removing skin from poultry portions. In this segment, we also have water reuse systems that are used extensively throughout that whole process. Then looking at secondary processing. And here, we're talking about poultry, red meat and fish. And as we define secondary processing we define this as being the processing steps after you take meat off the bone. And in this step, we have our DSI water jet portioning, slicing and trimming systems. We have inspection systems for foreign object detect, which are used in secondary and throughout further processing. And we also have a nice range of marination equipment for inject and [indiscernible] and massage and [indiscernible] whole-muscle products. Then we have further processing. And this is where you start to see the end market participation really broadening into things like ready meals, bakery, fruit and veg. And that's in addition to poultry, red meat and fish. And Further Processing is really where our customers add the most value to the product. And here, we have full line solutions in terms of coating and frying, cooking, freezing, tray seal packaging, clip packaging and also high-pressure processing. So as you can see, we have a very wide portfolio of equipment. But what they all have in common is that they're all designed to focus on the success of our customers. And we do that in kind of 3 broad ways: the first one is by focusing on our customers' product. We tend to talk a lot in our business about stainless steel and automation. But what really makes our customers successful is selling great food that's safe. And our combination of technology and application know-how enables our customers to deliver on that. Then we focus on our customers' productivity and sustainability goals, and our technologies allow our customers to produce at the highest throughputs, at the highest yields in the industry, while reducing water and energy consumption. And finally, we want to be easy to do business with. And our technology here seamlessly integrates into our customers' process. And our preventive maintenance programs allows our customers production to continue running and give them a good nights sleep. The key to maintaining our technological advantages through our R&D programs. And here, we continuously work with our customers to understand their needs and the broader market trends. And we've talked about this before in terms of food safety, convenience foods, lack of labor. We then use these insights to direct our innovation resources in R&D to develop products and solutions that help our customers address these needs, in some cases, exploit them. And you can see that throughout our whole portfolio in terms of our hygienic designs, our foreign object detect, high pressure processing as some examples. Now I want to share with you one of the exciting automation projects that we have in our business. And this is the Dual Robotic Harvester. This is a flagship automation project for us. And this is one of those projects that's been attracting a lot of those investment dollars in automation that you've been reading about a lot recently in the poultry industry. So just to explain what this does. The Dual Robotic Harvester allows our customers to harvest portions directly from the belt -- the production belt from amongst [ shun ] at incredibly high speeds. And today, that process is normally done through operators. The DSI uses imaging technology to scan each individual piece coming into the machine and then using scan and cuts -- scan cuts software and 80,000 PSI of water jet accurately cuts portions to target weight and dimensions, again, at very, very high speeds. So you combine these 2 pieces together, and it allows our customers to increase their throughput and yields compared to a manual process, and it also allows them to remove up to 15 positions from the production line. And in the current tight labor market, that's as a big deal. The [indiscernible] robot that's used to pick the portions has been uniquely designed to work in a harsh environment and uses a unique air movement technology to pick and throw the portions rather than using traditional robotic grippers that are much slower to operate and very difficult to clean. So this means our customers can run faster, they can run safer. They can run without labor. And of course, they can get that valuable high yield as well. This technology is working today for -- in a sandwich portion for a well-known quick-service restaurant, and we're currently developing software to move into adjacent markets for other quick service restaurants. Now we should point out that there are many production lines like this or many production lines doing these products running with manual labor. And with each of these solutions selling for somewhere between $1 million and $2 million, this represents a really nice growth opportunity for JBT. Okay. Our next project is a good example of how we've taken recently acquired technology and combined them to create a unique value proposition for our customers in the whole belt water chilling process. So just to explain what that is. Chilling occurs after the slaughtering, killing and de-feathering and evisceration. And the chilling is important at this stage to reduce the bacteria growth. And by far, the most common method for chilling in North America is water chilling. And here, we have a market-leading position through our C.A.T. technology for water chillers. Antimicrobials are added at this stage in order to further reduce the bacterial load on the carcass. And we have a market-leading position in the delivery of antimicrobials through our Prevenio offer. Prevenio also has a process patent that under certain conditions, allows you to significantly increase yield. So what we've done with this development is we have taken the Prevenio antimicrobial delivery and Auto-CIP feature, we've taken the C.A.T. whole bird chiller and our Prime water reuse system and brought them all under the control of one control system that we call M-BOS. We've added some sensors. We've added some vision technology, and some complicated software that we've developed through our in-depth knowledge of the process. And that allows us to fully automate and optimize the process. This means our customers can increase their throughputs. They can increase their yield, they can eliminate labor, all whilst reducing water, chemical and energy consumption by around 20%. Now this M-BOS control system has been field proven to increase yields by up to 2%, and that is a really big deal because each 1% of yield improvement can drive between $1 million and $2 million to their customers' bottom line. So really excited about this project. We believe it's an industry-first, and we also believe it's going to become the new industry standard. Okay. Our next automation project is in our automated guided vehicle business. And this is a really nice business for JBT that has benefited greatly from the recent demand for automation. JBT has a long history of making automated guided vehicles and supplies them into many different industries, like building materials, automotive, hospitals, consumer goods and of course, food and beverage. So this development allows our customers to use AGVs in a cold storage warehouse, where our customers are having a really difficult time finding employees, finding people to work in such low temperatures for any period of time. So this technology really solves a big problem for our customers and it saves our money. The cost of an AGV over a typical 10-year life cycle is around 75% lower than the cost of an employee. And you get the added advantage of AGVs coming up for work every day. They don't call in sick and they don't sneak around the back for a smoke. So they also -- the AGVs also allow for a very safe working environment and help with general material flow and warehouse efficiencies. We really like this development because we know that demand for frozen food is increasing, and that is increasing the demand for further cold storage capacity. So we see some really nice growth opportunity here. We also like this technology because it allows us to extend our participation further down the value chain in food and beverage, where we have a really good presence and some great relationships. Now I'm going to change gears a little and just add a little bit more color to what Brian had talked to earlier around how we are managing our margins in the difficult environment? So of course, as you've heard, we are seeing a lot of, like everyone else in the market, we are seeing a lot of high inflation. We're also having a lot of supply chain interruptions. And of course, we are exposed to the same challenges that our customers have with labor availability. And each of these are challenging on their own, they're really combining to create a very unpredictable operating environment. And many of the causes of these things are outside of our control. But as Brian had discussed earlier, there are many things within our business are within our control that we can do. And Brian covered that well with the direct material savings, the JBT business system and our Lean RCI deployment. But I wanted to talk about pricing here. And the goal of these other initiatives is really to offset our inflation. But where we can't, we will pass on our increased cost to our customer in terms of pricing. And it's important to understand that the majority of our projects are quoted and priced on a case-by-case basis. That allows us to use our current costs of what we know about our current costs plus also the anticipated costs over the duration of the contract. And as Carlos pointed out in his presentation, the time between quoting a project and closing a deal can be several months. So we've had to reduce the validity period for our quotes from around 60 days down to around 14 days. And we've also added language to allow us to change our pricing based on the commodity -- various commodity pricing indexes. So that was really -- I just wanted to give you a little bit more color on how we're managing margins in the current difficult environment. Okay. Finally, I want to just leave you with a summary of our strategic initiatives for all of FoodTech as part of Elevate 2.0. So first, we're going to continue to innovate our new product and innovate on our products by focusing on reducing labor, increasing yields, improving food safety and, of course, helping our customers meet their sustainability targets. We're going to invest in digital tools to make it easier and better for us to support our customers and basically make us easier to do business with. We're also going to grow our recurring revenue by developing new business models. And here, focusing on more customer success metrics, things like [ pay per ] use. And as Carlos and I have mentioned, there are significant growth opportunities within FoodTech, and we intend to capture these by entering adjacent markets through NPD and M&A. We're going to continue to expand our margins through RCI sourcing and our JBT business system. And of course, we intend to maintain the excellent discipline you've seen recently in our cash generation to keep our balance sheet in good health and help fund our investments. So in Elevate 2.0, as we have said, is all about digital-enabled growth. And there's been a lot of development work done on that in the past year, and you're going to find out more about that soon. And Carlos and I have been heavily engaged in this process. And so now what I'd like to do is pass over to Kristina to share more details on our digital strategy.

Please welcome the Executive Vice President and Chief Information and Digital Officer, Kristina Paschall.

Hello. I'm Kristina Paschall. I'm our Chief Information and Digital Officer. I've been with the company for about 5 years, and I'm really excited to be here today to talk about our digital strategy. So JBT's vision is to become a solutions partner for our customers, and we know that digital is required to do so. We are investing. And at the highest level, our solution will provide better machine insights, access to inventory and revitalized service offering. This will provide value to our customers, generate higher recurring revenue for JBT thus allowing us to reinvest in our digital solution and continuously improve it. JBT has many strengths. We're going to capitalize on those strengths and extend them, focusing on life cycle relationships. We're going to help our customers with system-wide performance, not just on their machine. We're going to bring solutions through digital and ultimately become outcome-driven with our customer. So this isn't new for JBT. We've been working on digital for a while. But what we're finding is that our customers are even more willing to engage in digital now. For the last few years, we've been primarily working on IoT. So all about machine connectivity. We're going to continue to work on that, but we're going to be offering additional customer digital experiences. We're going to revitalize our service offering. And we're going to do this hand-in-hand with our customer, which we'll talk about in a minute. We expect, over the next few years, that we will roll out to the majority of FoodTech. And then beyond that, we expect there to be additional digital experiences and products that we can offer our customer around sustainability, traceability, consulting services perhaps with the data we collect and beyond. Okay. So Brian talked about this a little bit earlier. So we've been doing some very deep customer research over the last few -- last 12 months or so. And I want to tell you, this isn't a survey we sent out to our customers. This isn't a couple of conversations. This is conversation after conversation with different customers around the world. We've sat next to them on the factory floor. This isn't -- I'm a technologist. This isn't technology looking for a problem to solve. We've talked to our customers, we understand their pain points, and we've built digital solutions around it. Over the last 12 months, we've been sitting with our customers. We've been showing them prototypes. They provide feedback to us. And that feedback loop provides a nice way to put that back into our digital solution and grow it from there. Okay. So Today, we are excited to introduce our digital solution. We are calling it OmniBlu. Omni, it means all things and it speaks to this holistic customer experience that we have been developing. And Blu, that's JBT. That's our company that we're so proud of. And this is -- in our quest to be a solution provider for our customer. So OmniBlu, smart insights and connected care. I'm going to talk a little bit about the different modules that we've developed here. But at its core, OmniBlu is our promise. It's our promise to be the partner by our customer side in the digital era. We'll be providing a frictionless way, a very easy way to work with JBT. We'll be helping them with proactive maintenance and optimizing food production lines. That's OmniBlu. Through our deep customer research, we've identified 5 main areas for our customer. All of these use cases work in concert together. It's holistic. We've talked to -- at our customers multiple roles. So we call these personas. These are maintenance managers. These are production managers and each of them have different needs, and we understand that. Our 5 use cases that we're focusing on are frictionless parts and service, machine performance, machine vision, maintenance management and byproducts and sustainability. So let's drill in a little bit to each of those. Okay. Frictionless parts and service. You can think of this like a customer portal. Now with this module, our customer will log on, they'll see the machines that they bought from JBT. They'll be able to drill in the digital schematics of those machines, drill into a specific part that they might identify is compromised, order it, be able to understand what the lead times are and when it will be arriving at their plant. They'll be able to schedule service very easy. Frictionless parts and service seeks to reduce downtime for our customers. Now we've got machine performance. So machine performance is quite like and most related to what we've been developing in our iOps solution. This is all about machine connectivity -- it's all about alerts, alerts to the production managers when something is not operating as it should. It interacts with the frictionless parts and service module. So let's say you identify something is failing, you can take action right then and there. That's the so what. You take action right then and there and you fix your problem. The machine performance module seeks to improve our customers' yield and again reduce downtime. We have machine vision as a focus. Across JBT FoodTech, we have machine vision capability, and we feel that this can be expanded so much further. So we're identifying the right parts down the food line where machine vision can aid in identifying food safety and quality problems as they're happening to minimize product throwaway. The maintenance management module is something that we're also very excited about. This is for the maintenance manager in mind. So when a customer buys a machine from JBT, we give them a schedule of maintenance, a proactive maintenance schedule that they should complete in order to keep that machine running well. That would be time based at its onset. But now because we have the machine connected, we will know the actual usage on that machine, and we can prompt the maintenance manager to schedule that maintenance according to actual usage. Further, we've incorporated machine learning into this module. So perhaps at a customer site, there's something specific about their environment that might cause the machine to operate a little bit differently. That will be fed back into the knowledge about the machine and when those maintenance events need to occur -- and again, we'll prompt the customer to act accordingly. And finally, our byproducts and sustainability module is a focus -- sustainability, as we've talked about many times today, is a focus of our customers, and we want to help them with their ESG goals. Helping the customer with their ESG goals by doing things like recommending reduction of resources like water and oil will help them meet their sustainability goals as well as reduce production costs. Okay. So we have a video to show you today. This is a video of OmniBlu, and then we hope it brings it to life a little bit for you. [Presentation]

Great. I hope you enjoyed that. We're very excited. And as you can see, this is real, this is built and it's ready to be offered. So we wanted to go through a recent case study with one of our customers about the potential value creation. And it's important to note that each customer is a little bit different. Each machine type is a little bit different. So this is an example from one of our HPP customers. The OmniBlu solution has the potential to unlock 1,300 hours of annual hours of productivity gained. The unlock of that capacity for this particular customer has the potential to deliver additional $1.5 million in sales growth using the elements that you see here on the right as part of our solution. So digital transformation. This isn't easy. It's not just about the technology. And JBT is investing in 4 key areas, to make this happen and deliver upon our promise. We're investing in the commercial process. We've designed and offer very carefully with customer feedback. We've tweaked our processes around lead generation and funnel management for OmniBlu. We've been working on marketing and messaging for our customers so we can articulate the value that this will create for them. Also very important, we've been investing in our supply chain. In order to ensure timely delivery of parts and service for our customers, we're investing in inventory and in our service network. We're also investing in talent. JBT has an amazing workforce. And we're investing in this talent to give them the additional skills that are required for OmniBlu, things like data science. And finally, we're really proud of the technology on which we built this. It's modern cloud architecture, and it's got security first in mind. Cybersecurity and data security is of utmost importance to JBT and our customers, and that's incorporated into OmniBlu. We've got machine learning and AI, as we've spoken about a couple of times today, incorporated in the solution. And finally, with that customer work we've done, we've created an intuitive user experience, something that's very easy to use. Let's talk a little bit about the monetization. So several times today, it's been referenced that as compared to the initial equipment, we've got a 2 to 4x aftermarket revenue opportunity here. JBT typically captures 20% to 40% of that aftermarket opportunity. And with Omni -- we expect to grow that to 50% and beyond over time. So I'm going to wrap up here with this slide. The outcome that we project is incremental total FoodTech revenue growth of 1% to 2% CAGR through 2025. And we'll achieve that through aftermarket sales and service, equipment uplift and additional revenue stream opportunities, software, services, et cetera. We couldn't be more excited about OmniBlu. This solution and the value that it's going to bring to JBT customers. Thank you. We've got a break now. [Break]

Please welcome Executive Vice President of JBT AeroTech, David Burdakin.

Hi, everyone. I'm Dave Burdakin, I'm President of JBT AeroTech. I've been in that role for since joining JBT, about 8 years ago. It's my pleasure to bring to you a subject that I know you all love, and that is airline travel. So the headline for Aerotech today is, we made through the pandemic, we're on our way back and the future looks really bright. Here's why I say that. Passenger traffic is recovering. IATA predicts that by 2024, airline passenger travel will recover at least to pre-COVID levels. And based on recent booking trends, it's likely it's actually going to be before 2024 if that happens, and North America is leading the way. The U.S. infrastructure bill was passed, includes $25 billion over the next 5 years for upgrading our air transport system. Included in that will be a lot of money to upgrade airport terminals, which, of course, helps our boarding bridge business. Secondly, we have a very strong market position, particularly in North America, but we have a brand name that's known globally. And thirdly, we have a strong track record. Prior to COVID, for 6 years, we were seeing double-digit CAGR revenue growth and huge margin improvement and here's what that track record looks like on paper. As you can see -- actually right through the first quarter of 2020, we were on a roll with significant revenue and margin improvement. However, then, of course, COVID came and temporarily all but shut down airline traffic in early 2020. But fortunately, with the diversified product line we have, we actually came through that fairly well without a huge reduction in revenue. And then in 2021, when demand started coming back, we got our orders picked up. We were faced with the global supply chain shortage that Bob Petrie described very well as well as some labor shortages. And that restricted our ability to get product out the door and kept our revenue down. Same time, we got hit with global inflation, commodity inflation and so that deflated our margins. However, it did leave us, actually, beginning this year, with a near record backlog that's coming into the year. And as we work through our old backlog, we got some pricing recovery, along with the margin enhancement programs that you heard about earlier. We think we are shooting to get back to that $600 million in revenue fairly quickly, and continued steady improvement in margin along the way. So here's a quick look at who we are. We're made up of 3 businesses. We have 3 legged stool, if you will. One of them is the fixed gate equipment, otherwise known as the Jetway passenger boarding bridge that we all know and love. Secondly is the mobile ground support equipment, things like deicer trucks, cargo loaders, pushback tractors. And then thirdly is our maintenance services business. We operate and maintain baggage handling systems as well as technical facility maintenance at airports. So these pie charts show the mix of those products between the 3 businesses, pre-COVID as well as the mix of our markets. So we have five markets we sell to. The largest is airports, and that also includes airport consortiums as well as FBOs. And then we have our commercial -- our passenger airlines, our cargo airlines, ground handlers as well as defense customers. Now when COVID hit, the pie chart changed quite a bit because the airlines and the ground handlers -- the passenger airlines and ground handlers, both stopped ordering. So those pieces of the pie chart shrunk. The other ones grew and that primarily impacted our mobile ground support equipment that shrunk and the others grew. I said, recovery is well underway, here's why. I mentioned that air traffic demand is recovering and North America is leading the way. The cargo market has stayed strong through the pandemic, in fact, set some record load factors over that period of time. Thirdly, our aircraft fleets continue to expand. Boeing and Airbus are both very bullish over the next 20 years on aircraft deliveries, and every new aircraft that's delivered means there has to be ground support equipment with that aircraft to support it. And finally, that airport infrastructure investment, in fact, we're already seeing some airports have started projects already to find ways to spend that money that's coming from Washington. So why do customers choose JBT? The number one reason has been faster turns, fewer flight delays and improved productivity. Not only does that give our customers whether they're a passenger airline or they're a cargo airline, it gives them more profitability, of course, but it also makes their customers happier. And for a long time, the JBT brand name has stood for high reliability, low downtime, low total cost of ownership, ease of operation, ease of maintenance. But more recently, we've had customers coming to us for solutions in these other areas, sustainability, digital connectivity and automation. So I'm going to talk about why we've been investing in those things and what are the results of those investments next. So let's start with automation, starting with the mobile ground support equipment on the automation front. Our customers are seeing the same labor shortages that everybody else is and still labors being harder to find. It takes a fair amount of skill to drive a 7-ton capacity cargo loader up against the side of an aircraft time and time again and do it very quickly. We have a solution for that now. Now they can approach the aircraft and retract just by holding down a button -- the push of a button, which allows all the operators to move at the same speed as a very highly skilled operator. It means that less training is required for those operators when they first start the job. Very similar technology is true on the boarding bridge side, The JetDock -- our JetDock technology, we can -- again, in fact, today, there are boarding bridges that are being moved to and from the aircraft, it's simply by holding down a button. And more exciting yet, that technology is leading to something else that you're going to see in the near future when some day you're going to pull up to your -- on your flight, and you're going to pull up to your gate when you arrive, and you aren't going to have to wait for the gate agent to get down to the end of the Jetway in order to drive and dock with the plane because somebody is going to be able to do that docking to the plane remotely from some room somewhere else in the airport. And as passengers, I'm sure you're all excited to hear that. Next, digital connectivity. You heard a lot about digital connectivity from Kristina and the others about -- in the food processing world, while the same applies in aviation, fleet management, gate management solutions, changing from reactive maintenance, in other words, fix it when it breaks to predictive maintenance, saves a lot of time, money, fewer aircraft delays for our customers. And today at large airports, there are literally thousands of vehicles moving around the airport ramp, whether they're refueling trucks, they're bag tractors, they're pushback tractors, cargo loaders, catering trucks, fuel -- whatever. And nobody -- people that own those assets don't really know where any of them are or what exactly they're doing. Only the people driving them do, but that's changing now with fleet management tools. Now the owners can keep track of where they all are, they can keep track of which ones need fuel, which ones need maintenance work, preactive -- proactive maintenance rather than reactive maintenance. So those things all save money and time, fewer flight delays. Same is true on the passenger boarding bridge side. In fact, our -- with the iOPS, to what we refer to on our digital connectivity. With iOPS in the passenger boarding bridge business, we have one customer says they're getting their necessary return on investment simply on savings of jet fuel and the reduced downtime, the lower maintenance cost is all gravy on top of that. Sustainability. Airports and airlines are under lots of pressure to reduce their carbon footprint. That's no secret. And they're coming to us for solutions of that. Now I've already mentioned some of those solutions already that involve the automation, involve the digital transformation, but there's others. We're expanding our line of electric GSE. In 2019, we purchased LEKTRO, which is a leader in electric pushback tractors. And out of side benefit was that it also was an entrance for us to get into the general aviation or private aircraft market at the same time. So we're continuing to expand and upgrade our electric GSE offering. And last year, we proved in live demonstration and field testing of hydrogen-powered ground support equipment as well, that somewhere down the road that will be the next technology after electric. Our new Tempest-i deicer, also has operator-assist features that help in not only deice aircraft faster, but also reduce glycol use. And those things, of course, help the environment as well. And then finally, somewhat surprisingly, even our defense customers now are looking for solutions that are more fuel efficient not just for the environmental reasons, but because they want to reduce something they refer to as their fuel tail, which is the fuel supply that's required to run all the diesel equipment out in the field, particularly in forward deployed units. Which leads me to the next investment we're making, and that is on the defense side of the market. We estimate that the U.S. Department of Defense will be making program awards between now and 2026 that have a value -- potential revenue value of $2 billion over the next 5 to 10 years in purchases. So we've been investing in better technical solutions in order to win our fair share of that business servicing cargo aircraft, fighter aircraft as well as rotary aircraft. So in summary, we're poised for growth. We have some strong market tailwinds that are building. We've been investing in new products right through the pandemic. In fact, when the -- in the early stages of the pandemic, we made the point to say that our goal with the pandemic was we wanted to -- whenever it was over, when we -- we wanted to come out of it from a stronger competitive position than we entered it in. And we're doing just that. Third, international expansion is a big opportunity for us, growing the defense sales, I talked about. Increasing our base of recurring revenue, not just the traditional parts and service part of it, but our service business actually is recurring revenue because those are often long-term contracts. And finally, the margin enhancement programs that you heard about, the JBT business system gives us a structured process with a regular cadence, setting goals, measuring our performance, root cause problem solving. It's the foundation of our relentless continuous improvement culture at JBT. And combining all those things, we're going to be right back to getting to double-digit revenue growth and recovering back to high margins. So thanks for your attention. And with that, I'm going to turn it over to Matt Meister, our CFO.

Please welcome Executive Vice President and Chief Financial Officer of JBT, Matt Meister.

All right. Thanks, Dave. Good afternoon. We've heard a lot of exciting information today about our Elevate 2.0 strategy. And now I'd like to take a few minutes to walk you through our expectations for the financials. We've built a solid foundation here at JBT and provides a great jumping off point for our next phase of growth. Over the next 4 years, we will continue our revenue growth, the EBITDA margin trajectory. We will accelerate our investment in our digital platform. We will leverage our strong free cash flows and our disciplined approach to capital deployment to grow inorganically, and we will explore our vision of becoming a global pure-play food technology platform. That strong foundation that includes both our AeroTech and our FoodTech businesses, has demonstrated resiliency and a commitment to profitable growth over the last 7 years. And when we include our estimates for 2022 revenue, we will double from about $1 billion in revenue in 2014 to over $2 billion by the end of this year. That represents a CAGR of about 10%. The FoodTech CAGR during that time is about 12%, and AeroTech is close to 6%. But if you walk back to 2019, prior to the pandemic, and the impacts on the global passenger air travel industry, their CAGR was also close to 12%. From a margin perspective, JBT has expanded margins by over 300 basis points. FoodTech has expanded by 350 basis points. And by the end of this year, we expect the margins to be at or above 19%. AeroTech has expanded by over 450 basis points in 2019. And now as they're going -- as they're recovering, they should be getting back to their pre-pandemic margins of 13% to 14%. Speaking specifically of 2022, the uncertainty and operating challenges that we experienced last year in the early part of this quarter certainly still remain. And with our record backlog of $1 billion and continued strength in our recurring revenue, we have good line of sight to being able to deliver a 15%-plus year-over-year growth. And Q1 will be challenging, especially from a margin perspective, but we do expect to see improvement sequentially as we move through the year as the price actions we took in the back half of last year and the early part of this quarter, flow to the P&L and close the gap we've seen on price cost. Additionally, our business unit leaders and their teams are working to mitigate the challenges that we've had with supply chain and labor availability, partnering with their vendor base and with contract manufacturers and with manpower consulting firms, to help increase our throughput and get more product out of the door. So let's take a deeper dive look at our FoodTech business. As you heard from -- earlier from Carlos today, FoodTech business has been a growth engine for JBT, growing from just over $600 million in 2014 to $1.4 billion at the end of last year. And that growth was driven by a strong and stable core market and food and beverage processing, a really strong focus in growing and in strengthening our recurring revenue base and the successful integration of 18 acquisitions during that time. And as you heard throughout the presentation, there's a lot of opportunity for us to continue to grow with that FoodTech platform both organically and through our investments in our new digital platform and also inorganically as our market remains very fragmented, there's plenty of opportunity for us to add technologies and capabilities to increase our portfolio and provide full aligned solutions to our customers, as they demand. So what does all that mean over the next 4 years? Well, from a revenue perspective, we expect the business to grow organically between 7% and 9%, that includes the robust growth rate that we expect in 2022 of 15% plus. If I break that down a little further, we expect the core business to grow up between 6% and 7%. Again, aided by that strong market we talked about as well as all the initiatives that both Carlos and Bob mentioned during their presentations. Additionally, the benefits from our digital investments, we expect that to provide meaningful benefit to the P&L in 2023 and add another point or two to the overall growth rate. So overall, organically speaking, we think the FoodTech business should be about $1.9 billion by the end of 2025. Now shifting gears over to margins. We see an opportunity to expand margins by 250 to 350 basis points by 2025. We expect the business to be able to continue to adjust prices, to account for changes in input costs and stay slightly ahead of inflation. But the real opportunity for margin expansion comes from productivity and the benefits we'll get from the efficiency and additional volume, strategic sourcing and continuous improvement efforts, we would expect that to add another 50 to 75 basis points of benefit per year. And the digital strategy that should accelerate our recurring revenue and the favorable mix that we get from that accelerated growth rate should add another 50 basis points to our margins. So in total, organically speaking, again, for FoodTech, by 2025, we expect margins to be at 21% plus. Now you heard me mention the opportunity to grow inorganically. We definitely expect to remain very active in that space, deploying between $1 billion to $1.5 billion in capital over the next 4 years. In today's market, we estimate that would translate to about $500 million to $750 million in incremental revenue. And the contribution margins to that revenue is about -- it would be in the high teens, 20% margins. So all in, when you include the opportunities to grow organically and inorganically, we see the potential for the FoodTech business to be upwards of $2.5 billion in revenue and 21% margins. All right. Let's now switch back and talk about total JBT and our free cash flows and our balance sheet. That solid foundation over the last 7 years has generated about $1.1 billion in operating cash flows. Our relatively low CapEx spend that translates to about $900 million in free cash flow. We compare that to our net income. We have demonstrated that we can efficiently convert our profits into cash, with a free cash flow conversion rate of 132%. Now going forward, 2022, we expect that to be an investment year with some onetime investments in our digital platform as well as some incremental working capital to support that 15% plus growth rate. But for the out years and for the -- cumulatively for the 4-year period, we do expect cash flows to still be above 100% from a conversion perspective. Now if I break that down a little further and talk about FoodTech and AeroTech. The FoodTech business has a higher target, over 110% conversion rate, just given their margin profile and a relatively low net investment in working capital. AeroTech business has a slightly higher need for working capital, but yet, we expect their cash flows to still be above 90% from a conversion rate perspective in a given year. So still for both businesses, very strong and very efficient cash flow conversion. Now let me take a quick second to walk you through our sources and uses of capital and our priorities. Over the next 4 years, we expect the business to generate between $1 billion and $1.2 billion in cash from operations. After accounting for our CapEx requirements and our current dividend and potential share repurchases, we'll have over $600 million of excess cash to use for growth. And as a growth company, we definitely plan to continue to invest. With that excess cash and access to our bank facility, we can deploy up to $1.5 billion, as I mentioned, of capital to support inorganic growth and still stay within our desired leverage range of 2 to 3x EBITDA. Now there may be a scenario over the next 4 years where we venture into that 3 to 4x range for the right strategic deal, we would do that with a clear plan of being able to delever over the next 9 to 12 months. So our priorities remain very consistent. We will continue to focus on growth, but we expect to continue to provide solid returns on our invested capital. Before the impact of any M&A investments that we might make, we're targeting an ROIC of 15% plus for 2025. For our M&A investments, we expect returns to be double digits by year 3 for the smaller bolt-on transactions, in years 4 or 5 for the larger, more strategic ones. I know that was a lot of information and a lot of numbers in a relatively short period of time. So I want to quickly summarize the slide that you saw earlier in Brian's presentation. In total, we expect, organically, for the company to grow between 7% and 9%. FoodTech business should grow at a similar rate and the AeroTech business will grow at a slightly higher rate just given the fact that their markets are still recovering. Total EBITDA margins we expect by 2025 to be at 17% plus. That's a FoodTech margin rate of 21% plus and AeroTech margin rate, 14% plus and that 17% includes corporate expenses that we expect to average about 2.3% of total JBT sales per year. We remain focused on generating strong cash flows and leveraging those cash flows and our strong balance sheet to continue to invest in inorganic growth. And finally, as Brian mentioned, ROIC remains a critical metric for us, and it's embedded in our compensation targets. As I mentioned, again, before any impact on M&A, we have a target ROIC of 15% plus by 2025. Now with that, I will gladly turn the stage back to Brian for closing comments.

Thanks, Matt. So you heard an awful lot today. Really exciting, not just FoodTech, but also Aerotech, you can see they're very much on the recovery path. But let's talk about the key takeaways for today. First and foremost, JBT, we're very excited to explore this pure-play FoodTech strategy. Again, you've heard so much about the broad participation we have and it's really supported by these great macro trends that we participated in. And moreover, I think you got the good feel for what JBT's new strategy is going to be, this Elevate 2.0 supported by digital. What excites me, as I mentioned earlier, is this holistic view that we could have with our customer, connecting that application knowledge, that core technology, our service and increased engagement by virtue of that digital interface. We really think it's going to drive engagement and growth from here. And as Matt mentioned, JBT is a growth company. We are going to continue to deploy capital. It is a fragmented market. JBT is a leader in the marketplace. With this backbone of digital, service, global network, we can efficiently bring companies into the JBT family, globalize and support our customers even further. We've got a strong balance sheet. We've been showing a great cash flow, and we expect to be able to continue to do that in support of this growth. So I'm very excited. And with that, we've got a session for Q&A. So give us a few minutes, we'll set up and we'll be back in just a moment. [Break]

Okay. Thank you. Welcome back. We've got a robust Q&A portal. [Operator Instructions] So let's go back to the start. Brian, you talked a little bit about exploring alternatives for AeroTech. We have a lot of questions about what are the alternatives that we're considering and why are we considering this step now?

Sure. Absolutely. So, first and foremost is, why now? Why the announcement now? Given that today's Investor Day and the 4-year outlook, we felt it appropriate to give you a visibility as to where we think the portfolio will look during the time frame. In terms of the timing of the execution itself, we are going to take all of 2022 and into 2023 to understand the options that we have. I think that's important because it does allow AeroTech to participate in the recovery. As you can see, they're extraordinarily well poised for growth. And it certainly allows the combination of the recovery as well as investigating some of the options we have. Now there are multiple options that we can consider. You could do some kind of spin-off, RMT or a standard one. We understand there's pluses and minus to that. We want to continue to explore those pluses and minuses. Additionally, you could do a sale, you could do a structured sale, so multiple options exist for us. We feel that we're going to spend time to understand that and then we'll make some decisions as we progress into early 2023, with execution thereafter.

That's great. Brian, just some more on this topic, as you're getting asked a lot of questions. Can you talk a little bit about how you think about dilution, how you'll think through that? And there's questions around dis-synergies and perhaps traded cost. Can you give a little bit more flavor of how you'll think through that?

Sure. So first, obviously, there will be some transaction costs. We identify those separately and typically what we do on the large M&A actions, we would identify those and show them separately. However there, depending on the structure, which is again why we considering multiple options, tax free options versus taxable options, if it's taxable sale, there certainly would be dilution. AeroTech has a relatively low base. Remember, when we spun off from FMC in 2008. However, the way we view that, given the upside and the focus that JBT FoodTech would get. We think that is well worth cost of doing business.

Great. Great. Okay. So let's shift. Let's talk a little bit about digital and OmniBlu. So we have questions around how the OmniBlu solution is different from what people have heard in terms of iOPS?

Sorry, can you repeat?

Sure. OmniBlu, and how is it different from iOPS?

Absolutely. So as Kristina mentioned, when you think about iOPS, that was historically really about the machine performance. And now what the iOPS is doing is bringing all these incremental pieces to the puzzle as well as the interface. Maybe Kristina can give a little more color in that perspective.

Sure. Yes, we talked today about several different categories of functionality that OmniBlu is delivering. So not just machine performance, but then the ability to then take action based on that. Byproducts and sustainability is a new offering. Machine vision, although we do it a bit in FoodTech today, we're going to be expanding upon that. So it's really a very much larger breadth of capabilities. So our customers are ultimately enabled by digital and the use of the data around that.

That's great. And can you talk a little bit about how it's different from what competitors are doing and -- or how do you think about sort of the solution relative to other solutions? And how do we -- how do you think about the value creation story it provides for customers, right?

Certainly, others in our space have been investing in this. We know that I think, ultimately, this is where the industrial world is going and companies like JBT will have to continue to invest. And what I can tell you, what I think is different about the JBT approach here is the time and investment we've made over the last year or so, looking for very specific use cases that drive value. It's more than just a productivity play. It's more than just on the plant floor production and machine efficiency, it's so much more than that. You saw the ease of doing business from the parts portal, drilling down capability of having digital drawings, not having to pick up the phone to order the parts, you can schedule a service appointment, put it right into your calendar, right there. The machine vision, the machine productivity, all the things that go along with that and connecting them with this great interface and the interface is different based on your persona. What I mean by that is, if you're a maintenance manager, the tools and the pieces that you're going to use are different than, for example, a production manager or even a plant manager. So we've tailored the interface. And when you log on, you're going to have a different experience than somebody else. And the tools that you look at are going to be customized for your interface. So we think that those really specific use cases, as well as the manner in which our customers can interface with it. We think that's a real differentiator.

That's great.

Brian, if I may add. I think the way to look at this is we have a tremendous aftermarket program already. This is a huge enhancement. It's going to make things easier for our customers, doing business with JBT is going to allow JBT to do more things for our customers. So a tremendous enhancement to already we have in place.

I may add something as well. I think the unlock comes when you combine technology with deep and sophisticated domain knowledge, and we pull those things together. So that's where -- this is different than a technology solution that a customer might buy off the shelf. It's the JBT insights, the customer pain points that we've spent a lot of time understanding, combined with that technology, really into a business offering for FoodTech.

Absolutely.

That's great. And actually, Kristina, before we maybe dive a little bit on the cost side. There's a lot of questions around just the technology stack in general. Can you just talk a little bit about how the program was developed and sort of, frankly, the expertise and the working with FoodTech and how that was developed? Just talk a little bit more about the actual technology stack.

Sure. It's a bit reiterating, but we are working very closely with our FoodTech colleagues and a large team with a combination of technology people and our FoodTech colleagues adding in that customer insight. In terms of the technology stack itself, I mentioned a bit in the presentation of modern cloud architecture. So this is built on tools that are out there. I think the sophistication is the combination of those tools put together, again, with that domain knowledge. And I want to mention again, too, that we're doing this with a very strong focus on security. So we're pursuing certifications as you might see in other software solutions to deliver really a best-in-class solution.

Right. I'll give a little bit more color on how we're going to roll this out. Basically, we're starting -- it's definitely a call, walk, run. We've been developing the technology and the interface and the capabilities, as we mentioned over the last 12 months. We've rolled that out to a handful of product lines right now. We'll continue to accelerate that development into each. You've seen we have so many product lines. So that's what's going to take 2022, '23, '24 and mid- to 2025 to get through all of those product lines. And then from there, you're fully deployed. So it's important to understand why the growth continues to build as you go through the individual product lines themselves. And what's really interesting and unique about this is, each product line does have its own peculiarities and value drivers that can be different than another one. And again, as Kristina said, and it's not just up the technology tool. It is about that understanding and food expertise and the interfacing with the equipment itself. You can't replicate this, right? Microsoft doesn't have that technology -- that interfacing technology knowledge that we have. And that's why this is different. This is why this is something we feel is unique.

Great. Can we talk a little bit about -- can we talk a little bit about the interaction with other piece of equipment on the line? Will it do that? That's not JBT equipment? And then also, can you comment on sort of adoption? How does that adoption look like with JBT equipment, both with new equipment and potentially with the installed base?

Right. So good question. I would tell you, over the next several years, we have more than enough work to do to connect it to our equipment. Over time, we'll see, but frankly, given the scale of the opportunity, and we do offer connected solutions, obviously, with our fuller line solutions. So we certainly could connect JBT's lines together. When you start bringing in third parties of security issues and other issues, frankly, given the scale and size of the opportunity, we're going to focus over the next several years on that. And in terms of the adoption, again, as I mentioned, it's going to be product line by product line over the next several years. And what we've done is, we've chosen those product lines in terms of the pecking order that we feel has the highest uplift opportunity. So looking at those product lines and have the largest installed base, and that base has sensors already attached, certainly, it is a great value driver in terms of new business, and it's easier to sell those pro care packages and subscription agreements that are all rolled into 1 with new product offerings. But again, as over time, and you start to think about the value proposition to the company -- to the customer and they start to see the benefits, then you can roll out into the existing installed base as well over time.

Great. Great. Lots of questions on digital, but let's just take one more on the cost side. So lots of questions about sort of the cost of the program. How does that develop over time, the required investments? And then lots of questions on the stated ROIC, and how we think about that and how that is relative to the $45 million of CapEx that we -- that we mentioned there? So can you just talk a little bit about the costs and how it relates to ROIC that we've mentioned?

Sure. I'll start, and then Brian can add or Kristina can add. From a cost perspective, we did invest some of this in 2021, but the lion's share of the investment and what we communicated a little while ago in terms of the investment is in 2022, it's about $45 million, as Kedric said, on capital, and it's another $14 million to $15 million in expense. And there's some more investment that will happen as we go forward. As Brian mentioned, as we rolled that out to more products. But the onetime investment that's significant is really in 2022, and it will fall off significantly from there in terms of major investments, especially on the CapEx side. There'll be ongoing support costs for data scientists and software engineers. A lot of that cost will reside in the businesses in order to support the revenue that they're going to generate with this new solution. In terms of ROIC, I think we mentioned, it's above 20%. And I think what we'll see is, as I mentioned in the presentation, revenues will start to really accrue to the P&L meaningfully in 2023, but we're just rolling this out in 2022. So there's sort of a term that I use is a flywheel effect here as we roll this out, and that will start to ramp in '23, really take hold in '24 and '25. And that's when we'll see the returns get up in that high teens and above 20% in that 2025 year.

Right. I would agree with all that. ROIC on this does look really attractive. In 2025, it's that 20% plus. And as you continue with that flywheel effect, not only on the new equipment and the installations that comes with there, but as I mentioned a moment ago, continue to penetrate that installed base. So -- and what excites me the most is the feedback that we're getting from the customer base, again, in terms of these very specific end uses. So we have a high confidence level on the adoption. That said, it's new, right? So it is going to take commercial -- strong commercial effort, a strong supply chain effort, having the right people in place, and those are some of those investments that we're making in 2022. But we really had to start with the foundation of coming up with specific solutions to our customers on the specific benefits. And that's the part that we have -- we are very far along on, particularly on several product lines that we've introduced at this point.

Sorry, I got to add one more thing. And I think what we're typically talking about when we're talking about this returns that is really around our current installed base and the opportunity for the recurring revenue business. It's harder to measure, but I think there's a real opportunity is our ability to increase our win share on new equipment. And so if we have a win share of a certain percentage today, that should be better as we have a better tool out in the marketplace for that new equipment. And I think that's probably with a really exciting part because the opportunity there is pretty significant.

Great. Great. That's great. That's a good discussion on digital. Let's move on to FoodTech. Lots of questions there. And I want to start with one. Someone very astutely noticed sort of the growth in the total addressable market, both the approximate $20 billion for both diversified food and health and protein. And so the question is really around, can you talk about some of the factors that are driving sort of the growth in that addressable market for JBT? And then I think a follow-on to that is really around, how are we adapting our product offering around some of the changing consumer preferences for things like less meat or dairy alternatives? So start with the TAM and then maybe talk about how we address that TAM.

Sure. I'll kick off, and then I'll hand it to Bob and Carlos to give some color on some of these particular markets. So with regard to the TAM itself, when you think about the 20 and 20 for FoodTech, nearly half of that on the recurring revenue side, by virtue of digging deeper into some of these markets that we've gone and understanding the adjacencies that we now have access to, particularly on the end of the line with packaging. Now as we move to the right on those product flows, we are tapping into deeper into the markets, right? And additionally, we've been on the protein side, moving even further left into the primary side, as Bob talked about. So as we expand our product offering, as we expand our end use markets that we can apply that technology to, for example, the pharma, right? That typically, historically, would not have been in our TAM, right? And there are some near adjacencies, and we're not talking about all of pharma, right? We're talking about the things that we think that we can do for that. And that's a good example as adjunct to the question, and I'll particularly point to the alternative meats, right? So that's been a nice growing business for us. I could tell you, it's still in that 90% range of the traditional meat in terms of the market for that, call it, 10% for the alternative meats, but that's coming from a base of near zero 3 years ago, right? So there's some real opportunities. And I think what's really important in this regard is that it's not just the upstarts, right? You're seeing the large food and beverage players now move into the alternative meats and alternative beverage space. So maybe Carlos and Bob, if you want to give a little color in terms of where you think this is going?

Yes. No. As Brian said, the growth opportunities for plant-based are really quite striking and does start from a very small base, but we're starting to see lots of opportunities coming down the pipeline for us, especially in EMEA, by the way. But just to give you an example of how that plays into our portfolio, plant-based meat is made in different ways. And depending on how it's made, it can present itself as different opportunities for us. So one of the opportunities for plant-based is where the product is made through extruded process. And you have kind of a carpet of plant-based products coming out of the equipment, and that gives us opportunities for our DSI waterjet portioning system. And really, it's not about adopting the technology, it's about understanding how a new application works with the technology. So again, back to this food know-how. And another area is where we see a lot of plant-based product and convenience foods. And in those areas, we see opportunities for our coating, frying and cooking and freezing portfolio. So big second space.

What I would add to the question is there's definitely a tremendous growth opportunity in plant-based as Brian and Bob described. There's also a really nice growth in pet food, both with people taking more pets and also conversion rates on pet food, and we have some key technologies to process that product. I would say as it relates to diversified form health, there's also really nice opportunities to grow in the fresh side, as well as the packaging. I think it's very early stages for us in terms of packaging. And then beyond product, the other angle of how we can grow that share of the TAM is for our regional growth. And when you look at the world, and Brian talked about this, I think there's a nice play for us to keep growing in Asia. So that's kind of twofold. One is the adjacencies existing segments, but also I think we can grow regionally in markets that were underpenetrated.

Great. Great. More than a few questions for the team here, I heard a lot about AGV over the last few quarters. I know, Brian, you made some comments in terms of the mix of the 2021 orders. And so I won't re-ask that. But can you give a little bit more color on AGV? How it connects to the overall food business? And maybe just a little color on how that business looks relative to the overall business from a growth perspective?

Sure. AGV is a really great business for us, and it really is in the crosshairs of what we see in terms of labor automation. So they had their most successful year ever in 2021 in order taking, and I mentioned the scale of that business. And so the growth profile is better overall than all of JBT margin profile is similar to slightly lower given the amount of investment that we need to continue to deploy -- to maintain our advantage in that area. In terms of the connection with FoodTech, in the range of 40% to 50% of their business is associated with fast-moving consumer goods and food goods, which is really our customer base. So there is a tremendous amount of connectivity. As Bob said, with our great freezing franchise, connecting into things such as the cold storage AGV. So there are many points of connectivity. They do have also markets on the general industrial side that they participated as well. But given that strength and that ability to connect that to our customers as an additional offering, we really see this as an overall important part of the JBT portfolio.

Great.

I would just add that.

Yes, absolutely.

I think the really exciting thing about AGV is that the technology is very agnostic to the end industry. So you get exposed to these multiple industries. And with the lack of labor effect in many industries, really AGV's position to really take advantage of that.

Great. Great. So we're going to -- I'm going to wrap up FoodTech here. Lots of questions on it, but I'm going to end with a couple, and I'll try to wrap a couple together here. So can you provide an update on the current kind of execution environment and pricing decisions? And then kind of an overarching capstone question around the prior Elevate strategy. People are curious to hear how we think we did, and what did we learn?

Right. I'll hit the first one -- the second one first. So in terms of Elevate 1.0, if you will, we were actually a decent amount ahead of schedule as we moved into 2020. In fact, when you look at our guidance that we gave for 2020 prior to COVID, it was really strong numbers, would have exceeded every metric on Elevate 1.0. Obviously, given COVID and particularly the impact on AeroTech, we fell short of that from an EBITDA perspective and some -- and our margins as well. If you look at where we're going from here, FoodTech is well back on track given where we think we're going. In AeroTech, obviously, it's going to take a little bit longer, but even what you saw from Dave's slide, expecting a strong 2023 and thereafter. On the pricing environment, I'll start, and then I'll hand it to either Carlos and Bob. So the way -- there's 2 pieces to it, but particularly on FoodTech, as Bob mentioned, so because our -- we have 2 pieces so on the parts and service, we continue to do price increases as we see fit, if you will. It is business by business, but we've been doing 3, 4 price increases over the last 12 months. So we've been maintaining that, and we've seen the margins hold up on that. That's actually easier to manage. On the project side, on the equipment side, it's different. So as Bob mentioned, what we do time taking the the order. We have our costs in hand that we know that our current costs. And ultimately, we try to make a forecast is where our costs will be over the next couple of quarters. And we try to lock in as many of those costs as we can, but there are certain aspects to it where you can't perfectly predict specifically things like logistics, right? We don't know precisely 9 months by the time we end up shipping it where that's going to be. So there is a bit of a lag effect, right? We've seen FoodTech, while they're generally -- we missed our margins by about 100 basis points or so in 2021. But generally, we are able to keep pace, and we do expect to continue these pricing actions and maybe give a little bit more color into how you guys think of it in that regard?

One thing I would add, Brian, is that our business is creating value for our customers through food technology. We don't want to get into the business of taking on commodity pricing risks. So we are adding [Indiscernible] to allow us to vary our pricing with commodity pricing index. We want to keep up with that business.

Yes, I would say it is really a very challenging environment. Like, every week, there's something happens with commodity prices, electrical parts, supply chain, with freight. I think we've learned, I think we're getting much better. I think Bob covered some of the actions that we're taking in terms of quote validity, in terms some of the [Indiscernible] protection that we're doing. Also, I think we're improving our internal processes when we receive an order and the time it takes to go through engineer and the time it takes to place to store suppliers for improving that. So I would say we're in much better shape today than we were a few months ago, we're learning, but it is definitely a very challenging environment. I think everyone knows that.

Great. Great. So before we go to financials, let's just hit one AeroTech question, and it relates to sustainability. So the question is, does the adoption of EV, ground support equipment changed the market share opportunity? And can you talk a little bit about JBT's opportunity to really drive that market, particularly how that type of equipment looks relative to kind of more traditional equipment from a selling price and margin and contribution to overall AeroTech?

Sure. Well, it's very similar in terms of the margin profile opportunity. In terms of market share opportunity, it's definitely a -- it's an opportunity to gain market share with longer duty cycles on top of what's always been our advantage on the traditional diesel [Indiscernible] client ease of operations and ease of maintenance and high reliability. So by building off those things and then coming up with strong electric vehicle solutions, we do have an opportunity gain share.

I'll add to that. And when you think about one of the benefits of AeroTech's diversification, they've got the fixed and the mobile, one of the things that we just introduced in order to support the electrification of the airports is you can now charge JBT electric equipment using the Jet Bridge, right? We have power converters from the Jet Bridge to the equipment and nobody else can offer that because we have the ownership, if you will, of the technology surrounding the Jet Bridge. So that is one real nice connection point between those 2 businesses that we think will help develop the market. And what I can tell you and everything in my conversations with Dave is, every conversation includes a conversation about electrification because they are -- the airports are under tremendous stress to reduce emissions. And I'll add even on the automation side, we have many conversations around that. There's a lot of excitement about the auto docking, our JetDocksolution as well. And not only we can build that into the core solutions, but also, we can add kits, many cases, would allow them to deploy that automation solution on previously deployed assets.

I'll ask one more just on AeroTech. I know this is near and dear to Dave and everyone up here. But just can you comment on the depth of the commercial relationship with your customers, particularly on the commercial airline side and the ground handlers who were hit particularly hard during COVID?

Sure. We do have strong relationships with customers and ground handlers and the commercial airlines. And obviously, their capital spending was cut back very dramatically, especially in 2020 in the early stages of the pandemic. But we continue to work with them and continue on long-term planning for their needs, capital needs. And they are starting to order again, not to pre-COVID levels by any means, but we are receiving orders from passenger airlines now, several of them. And so we continue to stay right with them and offering value-added solutions. We continue to invest in upgrading our product line to meet their needs.

That's great. That's great. So with that, let's move to financials. We've got a lot of questions, as you can imagine, and I want to put a little bit of framework to this, lots of questions on margin. But before we go there, let's just start with the top line. So we've been talking quite a bit about this commercial environment that we're in. Can you provide a little bit more color in terms of the -- how that order book looks in terms of how it's going to flow through in the longer term through the numbers that they've seen today? And then can you also comment on Russia and Ukraine situation and any risk that you perceive there?

Sure. I'll start, and Matt can add. So we are in a robust environment right now. Cyclically, secularly and all the things that we do to bring these solutions to life is we've been very successful, obviously. The way we see it, play out over the next couple of years, obviously, we've guided to top line revenue growth for FoodTech organically in that 12% to 15% range, closer to -- add 3 points for the acquisitions that we performed in 2021, it gets you into that 15% to 18% range. So then when you look at the 7% to 9% over the 4-year period, you do have some moderation of the growth, but hanging on to those higher market shares and reverting back to, I would say, a standard growth profile that we see over the longer term. And the way that I view that, generally speaking, is, first of all -- first and foremost, it is supported by population growth and the effect of -- fact that people need to eat. So there's always support, even when you see some dips in demand for capital expenditures, ultimately, it comes back. But when you think about population growth in that 1% to 1.5% range, and then from there, you add on all the things that are driving investment, automation, sustainability, digital as well as all the consumer trends in support of that, and then JBT's ability to penetrate those markets faster than the others, we think that adds 3, 4 or 5 points to that general base level, right? So then you're talking about something in the range of 3% to 6% type growth depending on where we are in the cycle. And then you can add any kind of nominal impact from inflation from there depending on what your views on that is over the time frame. So we try to factor all those as we kind of get through this really robust period that we're in right now, and then continue to grow off of that higher base, so to speak.

And just to, I guess, answer that second part of your question, Kedric, around Russia and Ukraine. In our backlog now and our sort of normal business, it's about less than 1% of revenue. So it's not a huge impact to JBT. And right now, we're being very thoughtful about how to continue to support customers in the Ukraine that could potentially help the people in Ukraine, being thoughtful about how the sanctions and everything with Russia-owned companies and how we work through that. So -- we've been very thoughtful. We've been working with the businesses to make sure that we're compliant like we need to be, but the impact overall to JBT's financials isn't significant.

Right. And to be clear, for business into Russia and Belarus, we have ceased commercial activity in respect of everything that's going on there.

Great. Great. Let's -- we can take some more questions here. So the last question is about price, specifically about the price/cost benefit to the 2025 targets, and the 25 bps there. But maybe just generally talk a little bit more about sort of price as well as digital and the impacts on the margin over the long term a bit?

Yes. I think, as we talked about pricing in our business, I think Bob touched on it a few times. We're really trying to price for what the market can bear. And we do expect our products and our businesses given the technology and the demand for that technology, to be able to adjust those prices to account for the changes in the input costs. And so the 25 basis points is sort of our estimate for how we can stay ahead of inflation and the opportunity for expansion on margins, doesn't necessarily come off from price, it really comes from productivity gains that it will get from the business. So you kind of take it either way, but reality is we're going to price our products to account for the inflation and for market demand for our products, I guess, is the best way to put it. And then the digital benefit that we spoke to specifically in Kristina's part and then the walk that we showed is again, there's favorable mix from an accelerated growth rate in our recurring revenue. I think Carlos hit it earlier, but it just really adds another dimension to our recurring revenue business, another tool for our business to really support the customer a lot better. And we do see much more favorable margins on our recurring revenue streams than we do on our new equipment. And because of that, that's why we're saying it's going to add about 50 basis points of margin to the overall margins that we expect for 2025.

Right.

And Kedric, while we're on the topic of financials because I recognize we missed part of the first question, which was with regard to any overhead hangover from when AeroTech departs. I think that's an important question for everybody. Certainly, in the short term, there would be some dissynergies, right? My corporate cost for all of us here today, right, those aren't going to get split in 70-30. So there's definitely some short-term dissynergies. However, we think we can manage that particularly with our ability to attract businesses. Certainly, with capital that comes with AeroTech, we have that much more ability to redeploy that into cash flow earning businesses that we continue to support. We will manage the corporate expenses appropriately, some of them will move with AeroTech accordingly. We do charge out a lot already. Some of the division specific costs we do charge out are reflected in the division -- the segment results, but there is a fair amount of corporate overhead. And some that can go, some that -- most of it cannot. However, we do feel that we can grow into it and ultimately hit those overall margins that we've talked about longer term.

Great. And we have a time for a couple more questions here. One I want to hit is, somebody asked about a restructure program that we had a few years ago that really helped drive execution from a margin goal perspective. Is there something in scope of that magnitude again in the planning period? Anything that you can share on that?

Not in the short term. That program was highly successful for those that you recall. It did add about 250 basis points. It was crystal clear on the margin trends that we showed, and that was successful. Right now, we are extraordinarily busy serving our customers. We're investing in digital. We're investing in people. We're investing in our supply chain. We feel that we're in a position to continue to grow our market share. We always -- in terms of our relentless continuous improvement efforts have margin projects constantly. This is what -- that's part of what we do with our lean programs, with our JBT business system, that's what that program is about. So we are constantly looking for areas of opportunity. But at this point, given the growth trajectory that we're on, that we -- and we continue to project, we don't feel -- and we need this capacity, both people and physical resources, at least in my current viewpoint or certainly in the time frame that we've outlined as we sit here today, we don't see that. That said, if the market takes a turn and changes things don't turn out the way we foresee it, we've certainly shown the willingness and ability to execute on things that make sense financially for the shareholder.

I guess to put it more bluntly, in the 50- to 75-basis-point per year improvement that we talked about for FoodTech, specifically, there's no restructuring programs built into that. That's all sort of through the continuous improvement efforts and strategic sourcing efforts that the businesses go through.

Great. And let's take one more, something here and dear to me. M&A. We've got some studious folks math, who have done some math, and they have come up with some numbers. But I think you should -- if you can comment a little bit on the M&A and the model just a little bit of the assumptions there and generally the market, what we're seeing there and how we plan to attack that?

Sure. Well, like I said, we have the capacity in our current -- with our current cash flows and our opportunity with our bank facility to be able to deploy up to $1.5 billion of capital. It still remains sort of in our range of leverage that we'd like to stay in over a 4-year period. We're going to do something that's a little larger at one point in time, that might move us above that. In terms of our assumptions for revenue and margins, right now, we're looking at prices that are in the 2x revenue range. That's sort of how we get to that $500 million to $750 million in revenue. It depends on the business. It depends on the situation. It depends on if it's process versus more of a proprietary deal that Bob and Carlos are continuously working on, on a regular basis. And the margins that we are targeting for the businesses, we expect to see margins, especially in the FoodTech space in that high teens to 20% range. There may be a specific technology that we would need to fill out our product portfolio. And in that scenario, it may not be at that range. That's happened and that could happen again. But we would do that with a clear path to get the margins where they need to be in that mid- to high teens range in a very short period of time. That's got to be part of the thesis for us to be able to achieve the returns that we mentioned of double digits by year 3 for the smaller businesses and year 4 and 5 for the larger, more strategic ones. So...

Yes. And I can add to that, just taking a step back and looking at the overall M&A market. And the fact is, it is -- things are expensive right now, right? For modeling purposes, we use 2x EBITDA -- sorry, 2x revenue and then apply high teens margin to that and understanding that uplift on the EBITDA would be -- but the fact is, for a high-growth, high-margin business, you'll be above those ranges, right? You'll be into the mid-teens on EBITDA multiple basis and upwards of 3x revenue basis, right? But typically, what you're getting with that is a really high-quality business that runs well. And to the extent that we can continue to grow those, those are pretty interesting as well. So it is really going to be a mix of opportunities that we see. It is a competitive market. JBT has got a -- has a great value proposition when it comes to these businesses. And when these businesses really want to think about their legacy and do something bigger and broader, we really have an excellent chance of winning in this environment.

Great. Well, let's leave it there. There's been a lot of questions and there will be time for follow-up at a later date, but that will conclude the Q&A portion. And Brian, do you want to make any final comments?

Sure. Well, I really appreciate everybody coming out today. As you can see, a lot of exciting things going on with JBT, not just the portfolio and the FoodTech pure-play strategy, but Elevate 2.0 is compelling. And when you think about -- as I talked about earlier, that holistic relationship that we're developing with our customers, technology, the application knowledge, the customer care, all wrapped up with a digital framework that allows them to increase their engagement, we've got a great value proposition overall. And when you think about JBT as a whole, they're great recurring revenue franchise that provides that stability that downside protection, but with the ability to deploy capital and grow organically, we really felt we're extraordinarily well positioned as we sit here today. So thank you all for joining. It's been a pleasure. Great to see people face-to-face again. So thank you so much, and enjoy your day.