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What changed in JBT Marel Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of JBT Marel Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+293 added−263 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-23)

Top changes in JBT Marel Corp's 2023 10-K

293 paragraphs added · 263 removed · 169 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSources and Availability of Raw Materials All of our business segments purchase carbon steel, stainless steel, aluminum, and/or steel castings and forgings both domestically and internationally. We do not use single source suppliers for the majority of our raw material purchases and believe the available supplies of raw materials are adequate to meet our needs.
Biggest changeWe do not use single source suppliers for the majority of our raw material purchases and believe the available supplies of raw materials are adequate to meet our needs. We have taken steps to minimize impacts on the business caused by disruptions to the global economy, including supply chain disruptions, which began in 2020 and continued through 2023.
Available Information All periodic and current reports, registration statements, and other filings that we are required to make with the Securities and Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, proxy statements and other information are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC.
Available Information All periodic and current reports, registration statements, and other filings that we are required to make with the Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, proxy statements and other information are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC.
Marvin joined FMC Technologies, Inc. in April 2003, serving as Assistant General Counsel and Assistant Secretary, acting as Division Counsel for FMC Technologies’ Airport Systems Division and managing corporate legal matters. Before joining FMC Technologies in 2003, Mr.
Mr. Marvin joined FMC Technologies, Inc. in April 2003, serving as Assistant General Counsel and Assistant Secretary, acting as Division Counsel for FMC Technologies’ Airport Systems Division and managing corporate legal matters. Before joining FMC Technologies in 2003, Mr.
Paschall was the Chief Information Officer of Ferrara Candy Company (2013 – 2017). Before joining Ferrara, she held progressive senior IT leadership roles at Ingredion and GATX, having spent the previous part of her career in management roles at consulting organizations. 9 JACK MARTIN became the Executive Vice President, Supply Chain in April 2022. Prior to joining JBT, Mr.
Paschall was the Chief Information Officer of Ferrara Candy Company (2013 – 2017). Before joining Ferrara, she held progressive senior IT leadership roles at Ingredion and GATX, having spent the previous part of her career in management roles at consulting organizations. JACK MARTIN became the Executive Vice President, Supply Chain in April 2022. Prior to joining JBT, Mr.
Under the Comprehensive Environmental Response, Compensation and Liability Act, referred to as CERCLA, and related state laws and regulations, joint and several liability can be imposed without regard to fault or the legality of the original conduct on certain classes of persons that contributed to the release of a hazardous substance into the environment.
Under the Comprehensive Environmental Response, Compensation and Liability Act, referred to as CERCLA, and related state laws and regulations, joint and several liability can be imposed without regard to fault or the legality of the original conduct on 10 certain classes of persons that contributed to the release of a hazardous substance into the environment.
He joined the Company with extensive experience in global manufacturing across various industries including automotive, medical devices, and general industrial applications, including his prior roles at IDEX Corporation, where he held several finance leadership roles within the operations, ending with the Group Vice President, Health and Science Technologies role.
He joined the Company with extensive experience in global manufacturing across various industries including automotive, medical devices, and general 11 industrial applications, including his prior roles at IDEX Corporation, where he held several finance leadership roles within the operations, ending with the Group Vice President, Health and Science Technologies role.
MARVIN became our Executive Vice President and General Counsel in May 2014, and served as Secretary from July 2008 to August 2018, subsequent to which he has served as Assistant Secretary. From July 2008 until May 2014, Mr. Marvin served as Deputy General Counsel and Secretary, acting as Division Counsel for AeroTech and managing corporate legal matters. Mr.
MARVIN became our Executive Vice President and General Counsel in May 2014, and served as Secretary from July 2008 to August 2018, subsequent to which he has served as Assistant Secretary. From July 2008 until May 2014, Mr. Marvin served as Deputy General Counsel and Secretary, acting as Division Counsel for our former AeroTech Division and managing corporate legal matters.
Martin served in several group leadership roles with Dover Corporation from 2008 to 2017 with his last role being Vice President, Global Sourcing. Mr. Martin started and advanced his career in progressive purchasing and supply chain roles for companies like John Crane International, SKF / Chicago Rawhide, and Thermo Fisher Scientific. DAVID C.
Martin served in several group leadership roles with Dover Corporation from 2008 to 2017 with his last role being Vice President, Global Sourcing. Mr. Martin started and advanced his career in progressive purchasing and supply chain roles for companies like John Crane International, SKF / Chicago Rawhide, and Thermo Fisher Scientific.
Our equipment offerings include primary, secondary and further value-added processing, including chilling, mixing/grinding, injecting, blending, marinating, tumbling, flattening, forming, portioning, coating, cooking, frying, freezing, extracting, pasteurizing, sterilizing, concentrating, high pressure processing, weighing, inspecting, filling, closing, sealing, and packaging, which support a large and growing portfolio of food, beverage, and health end markets. • Automated Guided Vehicle Systems .
Our equipment offerings include primary, secondary and further value-added processing, including chilling, mixing/grinding, injecting, blending, marinating, tumbling, flattening, forming, portioning, coating, cooking, frying, freezing, extracting, pasteurizing, sterilizing, concentrating, high pressure processing, weighing, inspecting, filling, closing, sealing, end of line material handling, and packaging solutions, which support a large and growing portfolio of food, beverage, and health end markets. • Automated Guided Vehicle Systems .
We actively employ a broad range of marketing programs to inform and educate customers, the media, industry analysts, and academia through targeted newsletters, our web-site, seminars, trade shows, user groups, and conferences. We regularly introduce new internal digital resources designed to accelerate the quote-to-order process, identify cross-selling opportunities between our separate businesses.
We actively employ a broad range of marketing programs to inform and educate customers, the media, industry analysts, and academia through targeted newsletters, our website, blogs, social media platforms, seminars, trade shows, user groups, and conferences. We regularly introduce new internal digital resources designed to accelerate the quote-to-order process, identify cross-selling opportunities between our separate businesses.
We own approximately 702 United States and foreign issued patents and have approximately 343 patent applications pending in the United States and abroad. Further, we license certain intellectual property rights to or from third parties.
We own approximately 659 United States and foreign issued patents and have approximately 307 patent applications pending in the United States and abroad. Further, we license certain intellectual property rights to or from third parties.
The installed base also provides us with strong, long-term customer relationships from which we derive information for new product development to meet the evolving needs of our customers. Geographic Information We have operations strategically positioned around the world to serve the existing FoodTech and AeroTech equipment base located in more than 100 countries. See Item 1A.
The installed base also provides us with strong, long-term customer relationships from which we derive information for new product development to meet the evolving needs of our food processing customers. We have operations strategically positioned around the world to serve our existing equipment installed base located in more than 100 countries.
DECK became our President and Chief Executive Officer in December 2020 after serving as the interim Chief Executive Officer from June 2020 to December 2020. Mr. Deck served as our Vice President and Chief Financial Officer from February 2014 until December 2020.
Corcoran 41 Vice President, Corporate Controller and Chief Accounting Officer BRIAN A. DECK became our President and Chief Executive Officer in December 2020 after serving as the interim Chief Executive Officer from June 2020 to December 2020. Mr. Deck served as our Vice President and Chief Financial Officer from February 2014 until December 2020.
Through our FoodTech segment, our mission is to make better use of the world’s precious resources by providing solutions that substantially enhance our customers’ success, and in doing so design, produce and service sophisticated and critical products and systems for food and beverage companies that improve yields and boost efficiency.
Our mission is to make better use of the world’s precious resources by providing solutions that substantially enhance our customers’ success, and in doing so design, produce and service sophisticated and critical products and systems for food and beverage companies that improve yields and boost efficiency. We were originally incorporated as Frigoscandia, Inc. in Delaware in May 1994.
Outside the United States, we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary. The provisions of these agreements correspond in each case with the required or customary terms in the subject jurisdiction. Approximately 49% of our international employees are covered by global employee representation bodies.
None of our employees in the United States are represented by collective bargaining agreements. Outside the United States, we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary. The provisions of these agreements correspond in each case with the required or customary terms in the subject jurisdiction.
We may also be subject to the corrective action provisions of the Resource, Conservation and Recovery Act, or RCRA, and analogous state laws that require owners and operators of facilities that treat, store, or dispose of hazardous waste to clean up releases of hazardous waste constituents into the environment associated with their operations.
We may also be subject to the corrective action provisions of the Resource, Conservation and Recovery Act, or RCRA, and analogous state laws that require owners and operators of facilities that treat, store, or dispose of hazardous waste to clean up releases of hazardous waste constituents into the environment associated with their operations Many of our facilities and operations are also governed by laws and regulations relating to worker health and workplace safety, including the Federal Occupational Safety and Health Act, or OSHA.
We expect supply chain disruptions to continue into 2023, the effect of which will depend in part on our ability to successfully mitigate and offset the impact of these events. 6 Working Capital Practices In order to provide, and install, custom designed equipment, companies in the food machinery industry generally generate customer deposits, or advance payments, before construction begins.
We expect that these supply chain initiatives will continue to help us successfully mitigate the impact of these events. Working Capital Practices In order to provide, and install, custom designed equipment, companies in the food machinery industry generally generate customer deposits, or advance payments, before construction begins.
Our experienced global sales force is comprised of individuals with strong technical expertise in our products and services and the industries in which they are sold. 5 We support our sales force with marketing and training programs that are designed to increase awareness of our product offerings and highlight our differentiation while providing a set of sales tools to aid in the sales of our technology solutions.
We support our sales force with marketing and training programs that are designed to increase awareness of our product offerings and highlight our differentiation while providing a set of sales tools to aid in the sales of our technology solutions.
We have taken steps to minimize the impact of these increased costs by working closely with our supply base, primarily through supply chain and strategic sourcing initiatives that include supply base consolidation, make versus buy decisions, value engineering and component standardization, and best cost country sourcing.
By working closely with our supply base, primarily through supply chain and strategic sourcing initiatives that include supply base consolidation, make versus buy decisions, value engineering and component standardization, and best cost country sourcing, we have improved lead times and stabilized raw material costs.
Prior to that, he worked at Illinois Tool Works (2014 – 2018) as VP/GM at various times of each of the Global Weight & Wrap Division and the North America Service Division, and at Whirlpool Corporation (2003 – 2014) in positions of increasing responsibility. ROBERT PETRIE was appointed as our Executive Vice President and President, Protein in September 2021. Mr.
Rizzolo was the Group President, Specialty Retail Business at Marmon Holdings, Inc. (2018 – 2019). Prior to that, he worked at Illinois Tool Works (2014 – 2018) as VP/GM at various times of each of the Global Weight & Wrap Division and the North America Service Division, and at Whirlpool Corporation (2003 – 2014) in positions of increasing responsibility.
As part of our aftermarket program, we offer technology for enterprise asset management and real-time operations monitoring with iOPS™. In 2022, we launched our new digital solution called OmniBlu™, a subscription-based offering including best-in-class service, parts availability, and machine optimization capabilities - all supported by a powerful digital backbone leveraging AI, machine learning, and predictive analytics.
As part of our aftermarket program, we also provide a digital solution called OmniBlu™, a subscription-based offering including best-in-class service, parts availability, and machine optimization capabilities - all supported by a powerful digital infrastructure leveraging AI, machine learning, and predictive analytics.
Deck 54 President and Chief Executive Officer Matthew J. Meister 44 Executive Vice President and Chief Financial Officer Shelley Bridarolli 52 Executive Vice President, Chief Human Resources Officer James L.
Meister 45 Executive Vice President and Chief Financial Officer Shelley Bridarolli 53 Executive Vice President, Chief Human Resources Officer James L.
JBT's foundational commitment to safety is demonstrated by our world-class recordable and loss-time rates below. This safety information is provided in the CEO report to the Board of Directors at every Board meeting. JBT embraces diversity, equity, inclusion, and belonging ("DEIB"), and we believe a diverse workforce fosters innovation and cultivates an environment filled with unique perspectives.
JBT's foundational commitment to safety is demonstrated by our world-class recordable and loss-time rates below. This safety information is provided in the CEO report to the Board of Directors at every Board meeting. At JBT, we are deeply committed to fostering diversity, equity, inclusion, and belonging (DEIB) across all aspects of our operations.
Sales and Marketing We sell and market our products and services predominantly through a direct sales force, supplemented with independent distributors, sales representatives, and technical service teams.
Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K. Sales and Marketing We sell and market our products and services predominantly through a direct sales force, supplemented with independent distributors, sales representatives, and technical service teams.
For discussion of the risks relating to the attraction and retention of management and executive management employees, see “Part 1. Item 1A. Risk Factors.” Governmental Regulation and Environmental Matters Our operations are subject to various federal, state, local, and foreign laws and regulations governing the prevention of pollution and the protection of environmental quality.
Governmental Regulation and Environmental Matters Our operations are subject to various federal, state, local, and foreign laws and regulations governing the prevention of pollution and the protection of environmental quality.
ITEM 1. BUSINESS GENERAL We operate our business through two segments, FoodTech and AeroTech. We are a leading global technology solutions and service provider to high-value segments of the food, beverage, and aviation support industry.
ITEM 1. BUSINESS GENERAL We are a leading global technology solutions and service provider to high-value segments of the food and beverage industry. We design, produce, and service sophisticated products and systems for multi-national and regional customers.
Previously, Mr. Rizzolo served as a President, Protein North America (since 2020) and as the Vice President, General Manager of Protein North America Customer Care (2019 – 2020). Prior to joining JBT, Mr. Rizzolo was the Group President, Specialty Retail Business at Marmon Holdings, Inc. (2018 – 2019).
LUIZ “AUGUSTO” RIZZOLO became the Executive Vice President and President, Diversified Food and Health in October 2022. Previously, Mr. Rizzolo served as a President, Protein North America (since 2020) and as the Vice President, General Manager of Protein North America Customer Care (2019 – 2020). Prior to joining JBT, Mr.
Corcoran came to JBT in 2015 as Senior Manager of External Reporting and Technical Accounting. She was promoted to Assistant Corporate Controller in 2017 and Chief Accounting Officer in 2018. Prior to JBT she worked in the Audit & Assurance practice at Deloitte for nine years, with increasing levels of responsibility through senior manager. 10
Prior to JBT she worked in the Audit & Assurance practice at Deloitte for nine years, with increasing levels of responsibility through senior manager. 12
Our Automated Guided Vehicle Systems offerings include stand-alone, fully-integrated, and dual-mode robotic systems for material movement requirements with a wide variety of applications including automotive manufacturing, warehousing, and medical facilities. AeroTech markets its solutions and services to domestic and international airport authorities, passenger airlines, airfreight and ground handling companies, defense forces and defense contractors.
Our Automated Guided Vehicle Systems offerings include stand-alone, fully integrated, and dual-mode robotic systems for material movement requirements with a wide variety of applications including automotive manufacturing, warehousing, and medical facilities. On August 1, 2023, we completed the sale of the AeroTech business segment ("AeroTech").
Our ability to provide comprehensive sales and service in all major regions of the world, by maintaining local personnel in region, differentiates us from regional competition. Our historically strong position in the markets we serve has provided us with a large installed base of systems and equipment.
Our ability to provide comprehensive sales and service in all major regions of the world, by maintaining local personnel in region, differentiates us from regional competition. Geographic Information We have operations strategically positioned around the world to serve our existing equipment base located in more than 100 countries. See Item 1A.
The information contained on or connected to our website, www.jbtc.com , is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with the SEC. 8 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The executive officers of JBT Corporation, together with the offices currently held by them, their business experience and their ages as of February 16, 2023, are as follows: Name Age Office Brian A.
The information contained on or connected to our website, www.jbtc.com , is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with the SEC.
Risk Factors for a discussion of risks associated with our global operations. Customers No single customer accounted for more than 10% of our total revenue in any of the last three fiscal years. Government Contracts AeroTech supplies equipment to the U.S. Department of Defense, municipalities, and international governments.
Risk Factors for a discussion of risks associated with our global operations. Customers No single customer accounted for more than 10% of our total revenue in any of the last three fiscal years. Patents, Trademarks and Other Intellectual Property We own a number of United States and foreign patents, trademarks, and licenses that are cumulatively important to our business.
Petrie previously led JBT's Protein EMEA (Europe, Middle East, and Africa) business, with additional responsibility for JBT's Protein business in Asia. Mr. Petrie joined the Company in 2009 when Double D Food Engineering Ltd, where he was Managing Director and a shareholder, was acquired by JBT. During his tenure at JBT, Mr.
Petrie joined the Company in 2009 when Double D Food Engineering Ltd, where he was Managing Director and a shareholder, was acquired by JBT. During his tenure at JBT, Mr. Petrie has progressed through several general management and commercial leadership roles with increasingly complex responsibilities. Before joining Double D, Mr.
We compete by leveraging our industry expertise to provide differentiated and proprietary technology, integrated systems, high product quality and reliability, and comprehensive aftermarket service.
KG; Square Technology Group Co., Ltd; DSI Dantech A/S; Duravant LLC; Bettcher Industries, Inc; and ProMach Inc. We compete by leveraging our industry expertise to provide differentiated and proprietary technology, integrated systems, high product quality and reliability, and comprehensive aftermarket services for installed base of our equipment.
Developing and maintaining a strong intellectual property portfolio is an important component of our strategy to extend our technology leadership. However, we do not believe that the loss of any one or group of related patents, trademarks, or licenses would have a material adverse effect on our overall business.
However, we do not believe that the loss of any one or group of related patents, trademarks, or licenses would have a material adverse effect on our overall business. 8 Sources and Availability of Raw Materials We purchase carbon steel, stainless steel, aluminum, and/or steel castings and forgings both domestically and internationally.
Marvin 62 Executive Vice President, General Counsel and Assistant Secretary Kristina Paschall 48 Executive Vice President, Chief Information and Digital Officer Jack Martin 59 Executive Vice President, Supply Chain David C.
Marvin 63 Executive Vice President, General Counsel and Assistant Secretary Kristina Paschall 49 Executive Vice President, Chief Information and Digital Officer Jack Martin 60 Executive Vice President, Supply Chain Luiz "Augusto" Rizzolo 46 Executive Vice President and President, Diversified Food and Health Robert Petrie 54 Executive Vice President and President, Protein Jessi L.
We have historically maintained good employee relations and have successfully concluded all of our recent negotiations without a work stoppage. However, we cannot predict the outcome of future contract negotiations. Our strong employee base, along with their commitment to our uncompromising values of integrity, accountability, continuous improvement, teamwork, and customer focus, provide the foundation of our company’s success.
Approximately 49% of our international employees are covered by global employee representation bodies. We have historically maintained good employee relations and have successfully concluded all of our recent negotiations without a work stoppage. However, we cannot predict the outcome of future contract negotiations.
We provide aftermarket products, parts, and services for our installed base of FoodTech and AeroTech equipment, including retrofits and refurbishments to accommodate the changing operational requirements of our customers. We also provide continuous, proactive service to our customers including the fulfillment of preventative maintenance agreements, such as ProCare, and consulting services.
We also provide continuous, proactive service to our customers including the fulfillment of preventative maintenance agreements, such as PRoCARE ® and consulting services. 7 Order Backlog For information regarding our order backlog, refer to the section entitled “Inbound Orders and Order Backlog” in Item 7.
Employee safety, and managing the risks associated with our workplace, is of paramount importance to JBT. We give employees the training and tools to manage risk. We also empower employees to stop work if they encounter an unsafe situation.
Our strong employee base, along with their commitment to our uncompromising values of integrity, accountability, continuous improvement, teamwork, and customer focus, provide the foundation of our company’s success. Employee safety, and managing the risks associated with our workplace, is of paramount importance to JBT. We give employees the training and tools to manage risk.
We also own numerous United States and foreign trademarks and trade names and have approximately 969 registrations and pending applications in the United States and abroad. A substantial majority of these patents, trademarks and trade names are associated with the FoodTech segment.
We also own numerous United States and foreign trademarks and trade names and have approximately 703 registrations and pending applications in the United States and abroad. Developing and maintaining a strong intellectual property portfolio is an important component of our strategy to extend our technology leadership.
Petrie has progressed through several general management and commercial leadership roles with increasingly complex responsibilities.Before joining Double D, Mr. Petrie held various engineering, quality, and operational positions at NCR Corporation. JESSI L. CORCORAN became Vice President, Corporate Controller and Chief Accounting Officer in October 2020. Ms.
Petrie held various engineering, quality, and operational positions at NCR Corporation. JESSI L. CORCORAN became Vice President, Corporate Controller and Chief Accounting Officer in October 2020. Ms. Corcoran came to JBT in 2015 as Senior Manager of External Reporting and Technical Accounting. She was promoted to Assistant Corporate Controller in 2017 and Chief Accounting Officer in 2018.
Segment sales, operating results and additional financial data and commentary are provided in the Segment Analysis section in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 19. of the Notes to Consolidated Financial Statements in Part II, Item 8.
Our principal executive offices are located at 70 West Madison, Suite 4400, Chicago, Illinois 60602. Operating results and additional financial data and commentary are provided in the Results of Continuing Operations section in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.
For this reason, FoodTech can be less working capital intensive than many other industrial capital goods industries. AeroTech solutions do not generate a significant amount of advance payment from the air transportation industry, and therefore operations in this segment is generally more capital intensive. Human Capital Management We have employees located throughout the world.
For this reason, our business can be less working capital intensive than many other industrial capital goods industries. Human Capital Management We have employees geographically dispersed throughout the world. As of fiscal year end 2023, we have approximately 5,100 employees worldwide, with approximately 46% located in the United States.
The installed base of our equipment is a source of recurring revenue from aftermarket products, parts, services, and lease arrangements. Recurring revenue accounted for 47% of our FoodTech total revenue and 38% of our AeroTech total revenue in 2022.
Our historically strong position in the markets we serve has provided us with a large installed base of systems and equipment that is a source of recurring revenue from our aftermarket parts and service offerings and re-build services for customer-owned equipment.
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JBT also sells critical equipment and services to domestic and international air transportation customers through our AeroTech segment. Both segments operate globally and serve multi-national and regional markets. We were originally incorporated as Frigoscandia, Inc. in Delaware in May 1994. Our principal executive offices are located at 70 West Madison, Suite 4400, Chicago, Illinois 60602.
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DESCRIPTION OF BUSINESS We provide comprehensive solutions throughout the food production value chain extending from primary processing through packaging systems for a large variety of food and beverage groups, including poultry, beef, pork, seafood, ready-to-eat meals, fruits, vegetables, plant-based meat alternatives, dairy, bakery, pet foods, soups, sauces, and juices. Our solutions also support nutraceutical and powder applications.
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Financial Statements and Supplementary Data of this Annual Report on Form 10-K. DESCRIPTION OF BUSINESS Products and services FoodTech provides comprehensive solutions throughout the food production value chain that includes: • Food and Beverage Solutions .
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We also provide stand-alone and fully integrated automated guided vehicle systems for repetitive material handling requirements for use in manufacturing, warehouse, and other facilities. The product offering of our businesses includes: • Food and Beverage Solutions .
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The product offerings of our AeroTech businesses include: • Mobile Equipment . Our mobile air transportation equipment includes commercial and defense cargo loading, aircraft deicing, aircraft towing, and aircraft ground power and cooling systems. • Fixed Equipment . We provide gate equipment for passenger boarding. • Airport Services . We also maintain and enhance airport equipment, systems, and facilities.
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This sale was completed pursuant to the Stock and Asset Purchase Agreement, dated May 26, 2023, to sell AeroTech to Oshkosh Corporation. This divestiture supported the Company's strategy to become a pure-play food and beverage solutions provider. For additional information, refer to Note 2. Discontinued Operations of the Notes to the Consolidated Financial Statements.
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The amount of equipment and parts supplied to these programs is dependent upon annual government appropriations and levels of defense spending. In addition, United States defense contracts are unilaterally terminable at the option of the United States government with compensation for work completed and costs incurred.
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As part of our aftermarket program, we also provide a digital solution called OmniBlu™, a subscription-based offering including integrated best-in-class service, parts availability, and machine optimization capabilities - all supported by a powerful digital infrastructure leveraging AI, machine learning, and predictive analytics.
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Contracts with the United States government and defense contractors are subject to special laws and regulations, the noncompliance with which may result in various sanctions that could materially affect our ongoing government business. Patents, Trademarks and Other Intellectual Property We own a number of United States and foreign patents, trademarks, and licenses that are cumulatively important to our business.
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We also provide continuous, proactive service to our customers including the fulfillment of preventative maintenance agreements, such as PRoCARE ® and consulting services. We offer full service operating leases on certain high-capacity industrial extractors, which include routine parts and maintenance support. Recurring revenue accounted for 51% of total revenue in 2023.
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However, the disruptions to the global economy which began in 2020 and continued throughout the years 2021 and 2022 have impeded global supply chains, resulting in longer lead times and increased raw material costs.
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We believe our success is derived from continued innovation, applying differentiated and proprietary technologies to meet customers’ food and beverage processing needs. We continually strive to improve existing products and develop new solutions by working closely with our customers to meet their evolving needs.
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As of fiscal year end 2022, we have approximately 7,200 employees worldwide, with approximately 56% located in the United States. Approximately 8% of our employees in the United States are represented by three collective bargaining agreements, and less than 2% of employees in the United States are represented by agreements that will expire within two years.
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Our principal production facilities are located in the United States (Arkansas, California, Florida, New York, North 5 Carolina, Ohio, Pennsylvania, Virginia and Wisconsin), Brazil, Belgium, Germany, Italy, Spain, Sweden, the Netherlands, the United Kingdom, and South Africa.
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We are committed to creating an inclusive culture where employees can bring their whole selves to work and we strive to use our resources to support causes that help to create a respectful and accepting global community.
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In addition to sales and services offices based in more than 25 countries, we also support our customers in their development of new food products and processes as well as the refinement and testing of their current applications through 10 technical centers located in the United States (California, Florida, and Ohio), Mexico, Brazil, Belgium, Italy, Spain, Sweden, and the Netherlands.
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As part of JBT’s commitment to DEIB, our global DEIB Council, which partners with our executive management team to develop and deploy programs, processes and communications to further our DEIB objectives. JBT has formed employee network communities (ENCs) to create a safe space for underrepresented groups to build community, share experiences, foster professional development and uphold our culture of inclusion.
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Our global presence allows us to provide direct customized support to customers virtually anywhere they process food. Solutions, Products and Services We offer a broad portfolio of systems, equipment and services to our customers which are often sold as part of a fully integrated processing line solution.
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We are also focused on recruitment of diverse candidates as well as on internal talent development of our diverse leaders so that they can advance their careers and move into leadership positions within the company.
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Our systems are typically customized to meet a large variety of customer application needs within food and beverage groups, including poultry, beef, pork, seafood, ready-to-eat meals, fruits, vegetables, plant-based meat alternatives, dairy, bakery, pet foods, soups, sauces, and juices. Thus, actual production capacity ranges vary and are dependent on the food and product packaging type being processed.
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The JBT Tom Giacomini Engineering Scholarship Program provides twelve annual individual scholarships to minority students pursuing an engineering degree that are currently members of one of three national organizations: the Society of Women Engineers (SWE), the Society of Hispanic Professional Engineers (SHPE), and the National Society of Black Engineers (NSBE). 7 We invest in programs and processes that develop our employees' capabilities to ensure that we have the talent we need to execute our strategic business plans.
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Our fully integrated processing lines often span from the initial point of entry of raw products through further processing and end of line packaging. The initial step in the food processing cycle is primary processing, where the readily edible food is extracted from the inedible raw commodity or preserved in its raw form to increase shelf life.
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Our executive Performance Management Program ensures that all leaders have clear priorities, and that their performance relative to these priorities are linked to their total rewards package.
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Our primary processing offerings increase food yield, lower energy and water usage, reduce food waste, and enhance food safety. In the primary processing space, we offer solutions for meat and poultry applications, and fruit and vegetable processing equipment.
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Our global Talent Development Review process starts at a local level and ultimately rolls up to divisional leadership and the executive leadership team to identify talent development needs, mitigate talent risks and plan for succession. These talent plans are presented to the Compensation Committee of the Board of Directors each year.
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Products in the primary processing space include: • poultry overhead and conveyance systems; • offal and feather processing; • meat and poultry processing applications, including scalding, picking, evisceration, maceration, water re-use, paw processing, cut-up and deboning, wing segmentation, and skinning equipment; • pathogen protection for poultry and meat applications; • freezing, chilling, refrigeration, and proofing systems; • industrial citrus, tropical and temperate fruit and vegetable processing equipment, including cleaning, grading, storing, feeding, finishers, pulp systems, evaporators, ingredient recovery systems, slicing, washing, drying, transporting, and mixing; • specially formulated fruit and vegetable cleaners, post-harvest sanitizers, fungicides, and coatings; • skid-mounted products, including solutions for aseptic sterilization, bulk filling, and labelling, as well as ingredient and by-product recovery and clean-up systems; and • high-capacity industrial juice extractors; and • point of use produce juicers for retail markets.
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The result is a specific and actionable talent plan in every business that measures the health of our leadership pipeline and ensures the execution of the important priorities set for each business.
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The next step in the food processing cycle is secondary processing where the ingredients prepared through primary processing are transformed into consumable food or are further preserved for consumption.
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Our Leader Excellence Program provides an overview of the 13 competencies that have been identified in successful JBT leaders and deploys a formal framework through which these traits can be assessed and developed more broadly in our workforce. This ensures a fair, accurate and consistent approach in the development and assessment of leaders and potential leaders.
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Our secondary processing offerings add further value by transforming food into a more marketable and edible product while reducing labor through automation, increasing yields, improving product quality, reducing energy and water usage, lowering food waste, and enhancing food safety.
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We believe our management team has the experience necessary to effectively execute our strategy. Our CEO and segment leaders have significant industry experience and are supported by experienced and talented management teams who are dedicated to maintaining and expanding our position as a global leader in our markets.
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In the secondary processing space, we supply a broad portfolio of processing solutions for customers producing protein products, such as meat, poultry, and seafood, and liquid food and beverage products, including products used standalone or as ingredients in dairy products, bakery products, and fruit-based beverages.
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Many of our facilities and operations are also governed by laws and regulations relating to worker health and workplace safety, including the Federal Occupational Safety and Health Act, or OSHA.
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Products in the secondary processing space include: • meat and poultry processing functions, including tenderization, portioners and waterjet portioners, slicers and cordon-bleu slicers, attribute scanners/sorters, injectors, scales and weighing systems, brine preparation, injection, marination, mixers, grinders, flatteners, formers, and tenderizers; • x-ray detection systems created for the unique needs of poultry and fish; • aseptic systems, including sterilizers, fillers, blow molders and controls that can be used for bulk or retail production of diverse products such as not-from concentrate orange juice, milk, alt-dairy, purees, soups, sauces, and concentrates; • flavor vats, batching systems, melting systems, and storage tanks; • fully integrated industrial preservation systems that enable production of extended shelf life and shelf-stable foods in a wide variety of flexible, rigid, and semi-rigid packages; • rotary and linear filling and closing technologies for metal cans, glass jars, glass and plastic bottles, and pouches; and • integrated solutions for the processing of extended shelf life and shelf-stable food and liquid products including a line of continuous hydrostatic sterilizers, continuous rotary sterilizers, batch retorts, heat exchangers, and thermal process controls.
Removed
Burdakin 67 Executive Vice President and President, AeroTech Luiz "Augusto" Rizzolo 44 Executive Vice President and President, Diversified Food and Health Robert Petrie 53 Executive Vice President and President, Protein Jessi L. Corcoran 40 Vice President, Corporate Controller and Chief Accounting Officer BRIAN A.
Added
The final step in the food processing cycle is further processing where the food product is further refined through a variety of different value added techniques for broader or more convenient consumption.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

62 edited+19 added−27 removed122 unchanged
Biggest changeWhen we acquire a business, a substantial portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill is determined by the excess of the purchase price over the net identifiable assets acquired.
Biggest changeAs a result of our acquisition activity, our goodwill and intangible assets have increased significantly in recent years, and we may in the future incur impairments to goodwill or intangible assets. When we acquire a business, a substantial portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets.
However the impact of such increase costs may not be fully mitigated. Infrastructure failures or catastrophic loss at any of our facilities, including damage or disruption to our information systems and information database, could lead to production and service curtailments or shutdowns and negatively affect our business, financial condition, results of operations, and cash flows.
However, the impact of such increase costs may not be fully mitigated. 14 Infrastructure failures or catastrophic loss at any of our facilities, including damage or disruption to our information systems and information database, could lead to production and service curtailments or shutdowns and negatively affect our business, financial condition, results of operations, and cash flows.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could depress the price of our common stock. 21 GENERAL RISKS Fluctuations in currency exchange rates could negatively affect our business, financial condition, and results of operations. A significant portion of our revenue and expenses are realized in foreign currencies.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could depress the price of our common stock. GENERAL RISKS Fluctuations in currency exchange rates could negatively affect our business, financial condition, and results of operations. A significant portion of our revenue and expenses are realized in foreign currencies.
If our estimates or the underlying assumptions change in the future, we may be required to record impairment charges. Any such charge could have a material adverse effect on our reported net income. As a publicly traded company, we incur regulatory costs that reduce profitability.
If our estimates or the underlying assumptions change in the future, we may be required to record impairment charges. Any such charge could have a material adverse effect on our reported net income. 24 As a publicly traded company, we incur regulatory costs that reduce profitability.
Management's Discussion and Analysis of Financial Condition and Results of Operations -Critical Accounting Estimates – Defined Benefit Pension and Other Post-retirement Plans and Note 9. Pension and Post-Retirement and Other Benefit Plans of the Notes to Consolidated Financial Statements in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations -Critical Accounting Estimates – Defined Benefit Pension and Other Post-retirement Plans and Note 10. Pension and Post-Retirement and Other Benefit Plans of the Notes to Consolidated Financial Statements in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Crops or entire groves or fields can be severely damaged by a drought, flood, freeze, or hurricane, wildfires or adverse weather conditions, including the effects of climate change. An extended drought or freeze or a high category hurricane could permanently damage or destroy a tree crop area.
Crops or entire groves or fields can be severely damaged by a drought, flood, 17 freeze, or hurricane, wildfires or adverse weather conditions, including the effects of climate change. An extended drought or freeze or a high category hurricane could permanently damage or destroy a tree crop area.
Our profitability may be adversely affected during any periods of unexpected or rapid increases in interest rates on our variable rate debt.A significant increase in interest rates would significantly increase our cost of borrowings, and may reduce the availability and increase the cost of obtaining new debt and refinancing existing indebtedness.
Our profitability may be adversely affected during any periods of unexpected or rapid increases in interest rates on our variable rate debt. A significant increase in interest rates may significantly increase our cost of borrowings and reduce the availability and increase the cost of obtaining new debt and refinancing existing indebtedness.
Expanding through acquisitions involves risks such as: • the incurrence of additional debt to finance the acquisition or expansion; • additional liabilities (whether known or unknown), including, among others, product, environmental or pension liabilities of the acquired business or assets; • risks and costs associated with integrating the acquired business or new facility into our operations; • the need to retain and assimilate key employees of the acquired business or assets; • unanticipated demands on our management, operational resources and financial and internal control systems; • unanticipated regulatory risks; 18 • the risk of being denied the necessary licenses, permits and approvals from state, local and foreign governments, and the costs and time associated with obtaining such licenses, permits and approvals; • risks that we do not achieve anticipated operating efficiencies, synergies and economies of scale; • risks in retaining the existing customers and contracts of the acquired business or assets; and. • risk that unforeseen issues with an acquisition may adversely affect the anticipated results of the business or value of the intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business.
Expanding through acquisitions involves risks such as: • the incurrence of additional debt to finance the acquisition or expansion; • additional liabilities (whether known or unknown), including, among others, product, environmental or pension liabilities of the acquired business or assets; • risks and costs associated with integrating the acquired business or new operating facility into our operations; • a failure to retain and assimilate key employees of the acquired business or assets; • unanticipated demands on our management, operational resources and financial and internal control systems; • unanticipated regulatory risks; • the risk of being denied the necessary licenses, permits and approvals from state, local and foreign governments, and the costs and time associated with obtaining such licenses, permits and approvals; • risks that we do not achieve anticipated operating efficiencies, synergies and economies of scale; • risks in retaining the existing customers and contracts of the acquired business or assets; and. • risk that unforeseen issues with an acquisition may adversely affect the anticipated results of the business or value of the intangible assets and trigger an evaluation of the recoverability of the recorded goodwill and intangible assets for such business.
We manufacture our products at facilities in the United States, Belgium, Sweden, Brazil, Italy, Spain, United Kingdom, Netherlands and Germany. An interruption in production or service capabilities at any of our facilities as a result of equipment failure or any other reasons could result in our inability to manufacture our products.
We manufacture our products at facilities in the United States, Belgium, Sweden, Brazil, Italy, Spain, United Kingdom, the Netherlands, Germany, and South Africa. An interruption in production or service capabilities at any of our facilities as a result of equipment failure or any other reasons could result in our inability to manufacture our products.
Adverse national and global economic conditions could, among other things: • make it more difficult or costly for us to obtain necessary financing for our operations, our investments and our acquisitions, or to refinance our debt; • cause our lenders or other financial instrument counterparties to be unable to honor their commitments or otherwise default under our financing arrangements; • impair the financial condition of some of our customers, thereby hindering our customers’ ability to obtain financing to purchase our products and/or increasing customer bad debts; • cause customers to forgo or postpone new purchases in favor of repairing existing equipment and machinery, and delay or reduce preventative maintenance, thereby reducing our revenue and/or profits; • negatively impact our customers’ ability to raise pricing to counteract increased fuel, labor, and other costs, making it less likely that they will expend the same capital and other resources on our equipment as they have in the past; • impair the financial condition of some of our suppliers thereby potentially increasing both the likelihood of our having to renegotiate supply terms on terms that may not be as favorable to us and the risk of non-performance by suppliers; • negatively impact global demand for air transportation services as well as for technologically sophisticated food production equipments, which could result in a reduction of sales, operating income, and cash flows in our AeroTech and FoodTech segments; 13 • negatively affect the rates of expansion, consolidation, renovation, and equipment replacement within the air transportation industry and within the food processing industry, which may adversely affect the results of operations of our AeroTech and FoodTech segments; and • impair the financial viability of our insurers.
Adverse national and global economic conditions could, among other things: • make it more difficult or costly for us to obtain necessary financing for our operations, our investments and our acquisitions, or to refinance our debt; • cause our lenders or other financial instrument counterparties to be unable to honor their commitments or otherwise default under our financing arrangements; • impair the financial condition of some of our customers, thereby hindering our customers’ ability to obtain financing to purchase our products and/or increasing customer bad debts; • cause customers to forgo or postpone new purchases in favor of repairing existing equipment and machinery, and delay or reduce preventative maintenance, thereby reducing our revenue and/or profits; • negatively impact our customers’ ability to raise pricing to counteract increased fuel, labor, and other costs, making it less likely that they will expend the same capital and other resources on our equipment as they have in the past; • impair the financial condition of some of our suppliers thereby potentially increasing both the likelihood of our having to renegotiate supply terms on terms that may not be as favorable to us and the risk of non-performance by suppliers; • negatively impact global demand for technologically sophisticated food production equipment, which could result in a reduction of sales, operating income, and cash flows; • negatively affect the rates of expansion, consolidation, renovation, and equipment replacement within the food processing industry, which may adversely affect the results of operations of our business; and • impair the financial viability of our insurers.
Our equipment, systems and services create potential exposure for us for personal injury, wrongful death, product liability, commercial claims, product recalls, business interuption, production loss, property damage, pollution, and other environmental damages.
Our equipment, systems and services create potential exposure for us for personal injury, wrongful death, product liability, commercial claims, product recalls, business interruption, production loss, property damage, pollution, and other environmental damages.
These and any one or more of the factors listed below, among other things, could cause us not to achieve our revenue or profitability expectations in any given period and the resulting failure to meet such expectations could cause a drop in our stock price: • volatility in demand for our products and services, including volatility in growth rates in the food processing and air transportation industries; • downturns in our customers’ businesses resulting from deteriorating domestic and international economies where our customers conduct substantial business; • increases in commodity prices resulting in increased manufacturing costs, such as petroleum-based products, metals or other raw materials we use in significant quantities; • supply chain delays and interruptions; • effects of tight labor market on our labor costs resulting from higher labor turnover, shortage of skilled labor, and higher labor absenteeism, also in part due to effects of the COVID-19 pandemic; • changes in pricing policies resulting from competitive pressures, including aggressive price discounting by our competitors and other market factors; • our ability to develop and introduce on a timely basis new or enhanced versions of our products and services; • unexpected needs for capital expenditures or other unanticipated expenses; • changes in the mix of revenue attributable to domestic and international sales; • changes in the mix of products and services that we sell; • changes in foreign currency rates; • seasonal fluctuations in buying patterns; • future acquisitions and divestitures of technologies, products, and businesses; • changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments; and • cyber-attacks and other IT threats that could disable our IT infrastructure and create a meaningful inability to operate our business.
These and any one or more of the factors listed below, among other things, could cause us not to achieve our revenue or profitability expectations in any given period and the resulting failure to meet such expectations could cause a drop in our stock price: • volatility in demand for our products and services, including volatility in growth rates in the food processing industry; • downturns in our customers’ businesses resulting from deteriorating domestic and international economies where our customers conduct substantial business; • increases in commodity prices resulting in increased manufacturing costs, such as petroleum-based products, metals or other raw materials we use in significant quantities; 13 • supply chain delays and interruptions; • effects of tight labor market on our labor costs resulting from higher labor turnover, shortage of skilled labor, and higher labor absenteeism; • changes in pricing policies resulting from competitive pressures, including aggressive price discounting by our competitors and other market factors; • our ability to develop and introduce on a timely basis new or enhanced versions of our products and services; • unexpected needs for capital expenditures or other unanticipated expenses; • changes in the mix of revenue attributable to domestic and international sales; • changes in the mix of products and services that we sell; • changes in foreign currency rates; • seasonal fluctuations in buying patterns; • future acquisitions and divestitures of technologies, products, and businesses; • changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments; and • cyber-attacks and other IT threats that could disable our IT infrastructure and create a meaningful inability to operate our business.
Any limitation on the availability of such raw materials could discourage food producers from making additional capital investments in processing equipment, aftermarket products, parts, and services that our FoodTech business provides. Such a decrease in demand for our products could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Any limitation on the availability of such raw materials could discourage food producers from making additional capital investments in processing equipment, aftermarket products, parts, and services that we provide. Such a decrease in demand for our products could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Bribery Act of 2010 (the U.K. Bribery Act), and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws.
Bribery Act"), and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws.
Any future strikes, employee slowdowns, or similar actions by one or more unions, in connection with labor contract negotiations or otherwise, could have a material adverse effect on our ability to operate our business.
Any future strikes, employee slowdowns, or similar actions by one or more work councils, in connection with labor contract negotiations or otherwise, could have a material adverse effect on our ability to operate our business.
Significant investments in research and development efforts that do not lead to successful products, features, and functionality, could also materially adversely affect our business, financial condition, and results of operations. In 2022, we launched a new subscription-based digital solution called OmniBlu™, which will be a complex, evolving, and long-term initiative that will involve collaboration with our food-processing customers.
Significant investments in research and development efforts that do not lead to successful products, features, and functionality, could also materially adversely affect our business, financial condition, and results of operations. In 2022, we launched a new subscription-based digital solution called OmniBlu™, which is a complex, evolving, and long-term initiative that involves collaboration with our food-processing customers.
We have also increased our investments in our digital solution, OmniBlu TM , to support potential growth in parts and service revenue as well as the new revenue source of digital software subscriptions.
We have also made substantial investments in our digital solution, OmniBlu TM , to support potential growth in parts and service revenue as well as the new revenue source of digital software subscriptions.
Important factors that could cause us to limit, suspend or delay our stock repurchases include unfavorable market conditions, the trading price of our common stock, the nature of other investment opportunities presented to us from time to time, the ability to obtain financing at attractive rates, and the availability of U.S. cash.
Important factors that could cause us to limit, suspend or delay our stock repurchases include unfavorable market conditions, the trading price of our common stock, the nature of other investment opportunities presented to us from time to time, the ability to obtain financing at attractive rates, the availability of U.S. cash and restrictions imposed by U.S. securities regulations.
Actions may be taken in the future by the U.S. government, state governments within the United States, foreign governments, or by signatory countries through a new global climate change treaty to regulate the emission of greenhouse gases. Pressures to reduce the footprint of carbon emissions impact the air transportation and manufacturing sectors.
Actions may be taken in the future by the U.S. government, state governments within the United States, foreign governments, or by signatory countries through a new global climate change treaty to regulate the emission of greenhouse gases. Pressures to reduce the footprint of carbon emissions may significantly impact the manufacturing sector.
We operate manufacturing facilities in many countries other than the United States, the largest of which are located in Belgium, Sweden, Brazil, Italy, Spain, United Kingdom, the Netherlands and Germany. Our international sales accounted for 36% of our 2022 revenue.
We operate manufacturing facilities in many countries other than the United States, the largest of which are located in Belgium, Sweden, Brazil, Italy, Spain, United Kingdom, the Netherlands, Germany and South Africa. Our international sales accounted for 43% of our 2023 revenue.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Regardless of whether these claims have any merit, they can be burdensome and costly to defend or settle and can harm our business and reputation. RISKS RELATED TO OWNERSHIP OF OUR SECURITIES The convertible note hedge and warrant transactions may negatively affect the value of the Notes and our common stock.
These claims can be burdensome and costly to defend or settle and can harm our business and reputation. 22 RISKS RELATED TO OWNERSHIP OF OUR SECURITIES The convertible note hedge and warrant transactions may negatively affect the value of the Notes and our common stock.
Since our recurring revenue is dependent on growers’ and farmers’ ability to provide high quality crops to certain of our customers, our business, financial condition, results of operations, and cash flows could be materially adversely impacted in the event of a freeze, hurricane, drought, or other natural disaster.
Since our recurring revenue is dependent on growers’ and farmers’ ability to provide high quality crops to certain of our customers, our business, financial condition, results of operations, and cash flows could be materially adversely impacted in the event of a freeze, hurricane, drought, or other natural disaster. Customer sourcing initiatives may adversely affect our new equipment and aftermarket businesses.
Higher energy prices also increase food processors’ operating costs through increased energy and utility costs to run their plants, higher priced chemical and petroleum based raw materials used in food processing, and higher fuel costs to run their logistics and service fleet vehicles.
Our customers require large amounts of energy to run their businesses and higher energy prices also increase food processors’ operating costs through increased energy and utility costs to run their plants, higher priced chemical and petroleum based raw materials used in food processing, and higher fuel costs to run their logistics and service fleet vehicles.
A number of factors may adversely affect the labor force available to us in one or more of our markets, including high employment levels, federal unemployment subsidies, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration. These factors can also impact the cost of labor.
We have from time-to-time experienced labor shortages and other labor-related issues. A number of factors may adversely affect the labor force available to us in one or more of our markets, including high employment levels, federal unemployment subsidies, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration.
However, OmniBlu™ may not develop in accordance with our timelines, which could result in the competitive market outpacing our development. There is some uncertainty in the pace and depth of market acceptance of digital solutions in this industry. Our efforts in development and deployment of OmniBlu™ may also divert resources and management attention from other areas of our business.
There is some uncertainty in the pace and depth of market acceptance of digital solutions in this industry. Our efforts in development and deployment of OmniBlu™ may also divert resources and management attention from other areas of our business.
If we lose our significant technology advantage in our products and services, our market share and growth could be materially adversely affected. In addition, if we are unable to deliver products, features, and functionality as projected, we may be unable to meet our commitments to customers, which could have a material adverse effect on our reputation and business.
In addition, if we are unable to deliver products, features, and functionality as projected, we may be unable to meet our commitments to customers, which could have a material adverse effect on our reputation and business.
These provisions include, among others: • A Board of Directors that is divided into three classes with staggered terms; • Limitations on the right of stockholders to remove directors; • The right of our Board of Directors to issue preferred stock without stockholder approval; • The inability of our stockholders to act by written consent; and • Rules and procedures regarding how stockholders may present proposals or nominate directors at stockholders meetings.
These provisions include, among others: • A Board of Directors that is divided into three classes with staggered terms (although this three-class board structure is being eliminated over the next two years as a result of an approved proposal at our 2023 Annual Meeting of Stockholders); • Limitations on the right of stockholders to remove directors; • The right of our Board of Directors to issue preferred stock without stockholder approval; • The inability of our stockholders to act by written consent; and • Rules and procedures regarding how stockholders may present proposals or nominate directors at stockholders' meetings.
If we incur substantial liability and damages arising from such liability are not covered by insurance or are in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, financial condition, results of operations, and cash flows could be materially adversely affected. 19 TECHNOLOGY RISKS To remain competitive, we need to rapidly and successfully develop and introduce complex new solutions in a global, competitive, demanding, and changing environment.
If we incur substantial liability and damages arising from such liability are not covered by insurance or are in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
Actual results may vary from the guidance and the variations may be material. Investors should also recognize that the reliability of any forecasted financial data diminishes the farther in the future that the data are forecast.
Actual results may vary from the guidance and the variations may be material. Investors should also recognize that the reliability of any forecasted financial data diminishes the farther in the future that the data are forecast. In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
If we are unable to do this in a timely and cost-effective manner, especially in light of demands on our information technology resources, our ability to capture and process financial transactions and therefore our business, financial condition, results of operations, and cash flows may be materially adversely impacted. 12 We are subject to cyber-security risks arising out of breaches of security relating to sensitive company, customer, and employee information and to the technology that manages our operations and other business processes.
If we are unable to do this in a timely and cost-effective manner, especially in light of demands on our information technology resources, our ability to capture and process financial transactions and therefore our business, financial condition, results of operations, and cash flows may be materially adversely impacted.
With respect to our pending patent applications, we may not be successful in securing patents for these claims, and our competitors may already have applied for patents that, once issued, will prevail over our patent rights or otherwise limit our ability to sell our products. 20 Claims by others that we infringe their intellectual property rights could harm our business, financial condition, results of operations, and cash flows.
With respect to our pending patent applications, we may not be successful in securing patents for these claims, and our competitors may already have applied for patents that, once issued, will prevail over our patent rights or otherwise limit our ability to sell our products.
Provisions in our certificate of incorporation and by-laws may make it difficult and expensive for a third-party to pursue a tender offer, change-in-control, or takeover attempt that is opposed by our management and Board of Directors.
Our corporate governance documents and Delaware law may delay or discourage takeovers and business combinations that our stockholders might consider in their best interests. Provisions in our certificate of incorporation and by-laws may make it difficult and expensive for a third-party to pursue a tender offer, change-in-control, or takeover attempt that is opposed by our management and Board of Directors.
These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change-in-control or a change in our management or Board of Directors and, as a result, may adversely affect the marketability and market price of our common stock.
These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change-in-control or a change in our management or Board of Directors and, as a result, may adversely affect the marketability and market price of our common stock. 25 Our indebtedness and liabilities could limit the cash flow available for our operations and we may not be able to generate sufficient cash to service all of our indebtedness.
New products and enhancements of our existing products may also reduce demand for our existing products or could delay purchases by customers who instead decide to wait for our new or enhanced products.
Resolution of such issues may cause project delays, additional development costs, and deferred or lost revenue. New products and enhancements of our existing products may also reduce demand for our existing products or could delay purchases by customers who instead decide to wait for our new or enhanced products.
Our business operations rely upon secure information technology systems for data capture, processing, storage, and reporting. Notwithstanding careful security and controls design, our information technology systems, and those of our third-party providers could become subject to cyber-attacks.
Notwithstanding careful security and controls design, our information technology systems, and those of our third-party providers could become subject to cyber-attacks.
In response to these tariffs, several major U.S. trading partners have imposed, or announced their intention to impose, tariffs on U.S. goods. We import raw materials from or manufacture our products in China and 16 other such countries subject to these tariffs.
In response to these tariffs, several major U.S. trading partners have imposed, or announced their intention to impose, tariffs on U.S. goods. We import raw materials from China and other such countries subject to these tariffs. Any such duties or restrictions could have a material adverse effect on our business, results of operations or financial condition.
We have seen a trend towards aggressive enforcement of intellectual property rights as product functionality in our industry increasingly overlaps and the number of issued patents continues to grow.
Claims by others that we infringe their intellectual property rights could harm our business, financial condition, results of operations, and cash flows. We have seen a trend towards aggressive enforcement of intellectual property rights as product functionality in our industry increasingly overlaps and the number of issued patents continues to grow.
Outside the United States, we enter into employment contracts and agreements in certain countries in which national employee unions are mandatory or customary, such as in Belgium, Sweden, Spain, Italy, the Netherlands, Germany and China.
Our business could suffer in the event of a work stoppage by our unionized or non-union labor force. Outside the United States, we enter into employment contracts and agreements in certain countries in which national employee work councils are mandatory or customary, such as in Belgium, Sweden, Spain, Italy, the Netherlands, Germany and China.
Any reduction in our customers’ profitability due to higher energy or raw material costs or otherwise may reduce their future expenditures for the food processing equipment or airport equipment that we provide.
Any reduction in our customers’ profitability due to higher energy or raw material costs or otherwise may reduce their future expenditures for the food processing equipment that we provide. This reduction may have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Although GAAP expense and pension funding contributions are not directly related, key economic factors that affect GAAP expense would also likely affect the amount of cash we would contribute to pension plans as required under the Employee Retirement Income Security Act. 22 As a result of our acquisition activity, our goodwill and intangible assets have increased significantly in recent years and we may in the future incur impairments to goodwill or intangible assets.
Although GAAP expense and pension funding contributions are not directly related, key economic factors that affect GAAP expense would also likely affect the amount of cash we would contribute to pension plans as required under the Employee Retirement Income Security Act.
We often enter into large, project-oriented contracts, or long-term equipment leases and service agreements. These agreements may be terminated or breached, or our customers may fail to renew these agreements.
The cumulative loss of several significant contracts may negatively affect our business, financial condition, results of operations, and cash flows. We often enter into large, project-oriented contracts, or long-term equipment leases and service agreements. These agreements may be terminated or breached, or our customers may fail to renew these agreements.
High energy prices have a negative trickledown effect on our customers’ business operations by reducing their profitability because of increased operating costs. Our customers require large amounts of energy to run their businesses, particularly in the air transportation industry.
High energy prices have a negative trickledown effect on our customers’ business operations by reducing their profitability because of increased operating costs.
If any of the risks described below actually occurs, our business, financial condition, results of operations, cash flows and stock price could be materially adversely affected. BUSINESS AND OPERATIONAL RISKS Our financial results are subject to fluctuations caused by many factors that could result in our failing to achieve anticipated financial results and cause a drop in our stock price.
BUSINESS AND OPERATIONAL RISKS Our financial results are subject to fluctuations caused by many factors that could result in our failing to achieve anticipated financial results and cause a drop in our stock price.
This could result in negative consequences to us, including government investigations, penalties, and reputational harm. Unfavorable tax law changes and tax authority rulings may adversely affect results. We are subject to income taxes in the United States and various foreign jurisdictions. Domestic and international tax liabilities are subject to the allocation of income among various tax jurisdictions.
Unfavorable tax law changes and tax authority rulings may adversely affect results. We are subject to income taxes in the United States and various foreign jurisdictions. Domestic and international tax liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be adversely affected by changes in the geographic mix of earnings.
Our ability to make scheduled payments on or to refinance our debt obligations, including the Notes, will depend on our financial and operating performance.
We may be forced to take certain actions to satisfy our obligations under our indebtedness or we may experience a financial failure. Our ability to make scheduled payments on or to refinance our debt obligations, including the Notes, will depend on our financial and operating performance.
If we are unable to effectively integrate acquired businesses or newly formed operations, or if such acquired businesses underperform relative to our expectations, this may have a material adverse effect on our business, financial position, and results of operations. We face risks associated with implementing strategic alternatives for AeroTech.
If we are unable to effectively integrate acquired businesses or newly formed operations, or if such acquired businesses underperform relative to our expectations, this may have a material adverse effect on our business, financial position, and results of operations. 20 We have invested substantial resources in certain markets and strategic initiatives where we expect growth, and our business may suffer if we are unable to achieve the growth we expect.
Transitions in our senior executive management roles could adversely impact our strategic planning, specifically resulting in unexpected changes, or delays in the planning and execution of such plans and can cause a diversion of management time and attention. The cumulative loss of several significant contracts may negatively affect our business, financial condition, results of operations, and cash flows.
The loss of the services of any of our executive officers or other key employees for any reason could harm our business. Transitions in our senior executive management roles could adversely impact our strategic planning, specifically resulting in unexpected changes, or delays in the planning and execution of such plans and can cause a diversion of management time and attention.
In addition, our gross margins could be adversely impacted if raw materials, component parts, sub assemblies, finished goods, installation services and/or logistics provider's higher costs cannot be offset with timely pricing increases to customers.
In addition, our gross margins could be adversely impacted if raw materials, component parts, sub-assemblies, finished goods, installation services and/or logistics provider's higher costs cannot be offset with timely pricing increases to customers. 16 The disruptions to the global economy as a result of the war in Ukraine and other subsequent geopolitical events continue to impede global supply chains, resulting in longer lead times and increased raw material costs.
Even with rigorous testing prior to release and investment in product quality processes, problems may be found in newly developed or enhanced products after such products are launched and shipped to customers. Resolution of such issues may cause project delays, additional development costs, and deferred or lost revenue.
High-capacity products or products with new technology may be more likely to experience reliability, quality, or operability problems. Even with rigorous testing prior to release and investment in product quality processes, problems may be found in newly developed or enhanced products after such products are launched and shipped to customers.
Terrorist attacks and threats, escalation of military activity in response to such attacks, acts of war, or outbreak of pandemic diseases may negatively affect our business, financial condition, results of operations, and cash flows.
Currency fluctuations may also result in our systems and services becoming more expensive and less competitive than those of other suppliers in the foreign countries in which we sell our systems and services. 23 Terrorist attacks and threats, escalation of military activity in response to such attacks, acts of war, or outbreak of pandemic diseases may negatively affect our business, financial condition, results of operations, and cash flows.
Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import, or may otherwise adversely impact or business.
Foreign Corrupt Practices Act and other similar laws; • burden and cost of complying with different national and local laws, treaties, and technical standards and changes in those regulations; • transportation delays and interruptions; and • reductions in the availability of qualified personnel. 18 Changes to trade regulation, quotas, duties or tariffs, caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import, or may otherwise adversely impact our business.
Our balance sheet includes a significant amount of goodwill and other intangible assets, which represents approximately 48% of our total assets as of December 31, 2022.
The amount of the purchase price which is allocated to goodwill is determined by the excess of the purchase price over the net identifiable assets acquired. Our balance sheet includes a significant amount of goodwill and other intangible assets, which represents approximately 43% of our total assets as of December 31, 2023.
Dietary trends can create demand for protein food products but negatively impact demand for high-carbohydrate foods, or create demand for easy to prepare, transportable meals but negatively impact traditional canned food products.
Changes in food consumption patterns due to dietary trends or economic conditions may adversely affect our business, financial condition, results of operations, and cash flows. Dietary trends can create demand for protein food products but negatively impact demand for high-carbohydrate foods, or create demand for easy to prepare, transportable meals but negatively impact traditional canned food products.
Airports, airlines, and air cargo providers are continually looking for new ways to become more energy efficient and reduce pollutants. Manufacturing plants are seeking means to reduce their heat-trapping emissions and minimize their energy and water usage.
Manufacturing plants are seeking means to reduce their heat-trapping emissions and minimize their energy and water usage.
In addition, environmental laws and regulations affect the systems and services we design, market and sell, as well as the facilities where we manufacture our systems.
In addition, environmental laws and regulations affect the systems and services we design, market and 19 sell, as well as the facilities where we manufacture our systems. We are required to invest financial and managerial resources to comply with environmental laws and regulations and anticipate that we will continue to be required to do so in the future.
We are required to invest financial and managerial resources to comply with environmental laws and regulations and anticipate that we will continue to be required to do so in the future. 17 We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws. The U.S. Foreign Corrupt Practices Act (FCPA), the U.K.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws. The U.S. Foreign Corrupt Practices Act ("FCPA"), the U.K. Bribery Act of 2010 (the "U.K.
Moreover, some of our competitors operate in narrow business areas, allowing them to concentrate their research and development efforts more directly on products and services for those areas than we may be able to. High capacity products or products with new technology may be more likely to experience reliability, quality, or operability problems.
Moreover, some of our competitors operate in narrow business areas, allowing them to concentrate their research and development efforts more directly on products and services for those areas than we may be able to. 21 Our future growth is dependent on our ability to keep pace with the adoption of generative artificial intelligence and other machine learning technologies to remain competitive.
Any such duties or restrictions could have a material adverse effect on our business, results of operations or financial condition. Moreover, these tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries.
Moreover, these tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries.
Increased turnover rates within our employee base can lead to decreased efficiency and increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees. An overall labor shortage or lack of skilled labor, increased turnover, higher rates of absenteeism or labor inflation could have a material adverse effect on our results of operations.
These factors can also impact the cost of labor. Increased turnover rates within our employee base can lead to decreased efficiency and increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees.
The disruptions to the global economy, which began in 2020 and continued throughout the years 2021 and 2022 have impeded global supply chains, resulting in longer lead times and increased raw material costs. We have taken steps to minimize the impact of these increased costs by working closely with our suppliers and customers.
We have taken steps to minimize the impact of these increased costs by working closely with our suppliers and customers.
We are subject to ongoing audits by U.S. federal, state, and local tax authorities and by non-U.S. authorities. If these audits result in assessments different from amounts we recorded, future financial results may include unfavorable tax adjustments. BUSINESS STRATEGY RISKS We face risks associated with current and future acquisitions.
Although we believe our tax estimates are reasonable, we are subject to audit by tax authorities and the final determination of audits could be materially different from our historical tax provisions and accruals. BUSINESS STRATEGY RISKS We face risks associated with current and future acquisitions.
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The loss of the services 11 of any of our executive officers or other key employees for any reason could harm our business.
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If any of the risks described below actually occurs, our business, financial condition, results of operations, cash flows and stock price could be materially adversely affected. RISKS RELATED TO THE PROPOSED MERGER The Proposed Business Combination (as defined below) with Marel is subject to significant risks and uncertainties and may not be consummated on the expected terms, if at all.
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We have from time-to-time experienced labor shortages and other labor-related issues. These labor shortages have become more pronounced as a result of the COVID-19 pandemic and a sharp increase in demand for industrial goods as the global economy recovers from the effects of the pandemic.
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We intend to launch a voluntary tender offer for all of the issued and outstanding shares of Marel hf. (“Marel”) to effectuate a merger with Marel in the second quarter of 2024 (the “Proposed Business Combination"). Launch of the offer is subject to, among other things, confirmatory due diligence, further negotiations, and approval by our Board of Directors.
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INDUSTRY RISKS Deterioration of economic conditions could adversely impact our business.
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There is no assurance that an offer will be launched.
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Higher energy prices can reduce passenger and cargo air carrier profitability as a result of increased jet and ground support equipment fuel prices.
Added
In addition, even if an offer is launched, consummation of the Proposed Business Combination is expected to be subject to the satisfaction or waiver of various conditions, including valid acceptance of the offer from Marel shareholders representing at least 90% of the issued and outstanding share capital and voting rights of Marel, receipt of required regulatory approvals, receipt of required approvals from our shareholders and other customary closing conditions.
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This reduction may have a material adverse effect on our business, financial condition, results of operations, and cash flows. 14 Changes in food consumption patterns due to dietary trends or economic conditions may adversely affect our business, financial condition, results of operations, and cash flows.
Added
As a result, there can be no assurance that the Proposed Business Combination will be consummated on the expected terms, on the anticipated schedule, or at all. Any delay in consummation of the Proposed Business Combination will result in increased transaction costs and professional fees.
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Our failure to comply with the laws and regulations governing our U.S. government contracts or the loss of production funding of any of our U.S. government contracts could harm our business. The U.S. government represented approximately 1% of our 2022 revenue, directly or through subcontracts.
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If we fail to consummate the Proposed Business Combination, we may be required to pay Marel a break fee under any agreement that is entered into between the parties.
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Our AeroTech business contracts with the U.S. government and subcontracts with defense contractors conducting business with the U.S. government. As a result, we are subject to various laws and regulations that apply to companies doing business with the U.S. government. The laws governing U.S. government contracts differ in several respects from the laws governing private company contracts.
Added
If consummated, the success of the Proposed Business Combination will depend, in significant part, on the successful integration of the two companies, grow the revenue of the combined company and realize the anticipated strategic benefits and synergies from the combination.
Removed
Government contracts are highly regulated to curb misappropriation of funds and to ensure uniform policies and practices across various governmental agencies. Funding for such contracts is tied to national defense budgets and procurement programs that are annually negotiated and require approvals by the U.S. Department of Defense, the Executive Branch, and the Congress.
Added
Difficulties in integrating our and Marel’s business practices and operations may result in the combined company performing differently than expected, operational challenges or the delay or failure to realize anticipated benefits and synergies, and could have an adverse effect on our business, financial condition, results of operations, and cash flows.
Removed
For example, if there were any shifts in spending priorities or if funding for the defense aircraft programs were reduced or canceled as a result of the sequestration, policy changes, or for other reasons, the resulting loss of revenue could have an adverse impact on our AeroTech business.
Added
The issuance of shares of our common stock in connection with the Proposed Business Combination will dilute the ownership interests of our existing shareholders. In addition, the combined company's indebtedness is expected to be substantially greater than our current indebtedness.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following are significant production facilities for our JBT operations: LOCATION SEGMENT SQUARE FEET (approximate) LEASED OR OWNED United States: Madera, California FoodTech 271,000 Owned Ogden, Utah AeroTech 240,000 Owned/Leased Orlando, Florida AeroTech 239,000 Owned Lakeland, Florida FoodTech 200,000 Owned Sandusky, Ohio FoodTech 140,000 Owned Apex, North Carolina FoodTech 134,200 Owned/Leased Columbus, Ohio FoodTech 115,000 Leased Kingston, New York FoodTech 98,000 Owned Warrenton, Oregon AeroTech 94,000 Leased Stratford, Wisconsin FoodTech 93,000 Owned Eastlake, Ohio FoodTech 88,000 Leased Middletown, Ohio FoodTech 74,000 Leased Chalfont, Pennsylvania FoodTech 67,000 Leased Russellville, Arkansas FoodTech 65,000 Owned Riverside, California FoodTech 50,000 Leased International: Sint Niklaas, Belgium FoodTech 289,000 Owned Helsingborg, Sweden FoodTech 227,000 Owned/Leased Werther, Germany FoodTech 164,000 Owned Araraquara, Brazil FoodTech 128,000 Owned Adlington, England FoodTech 97,000 Owned Amsterdam, The Netherlands FoodTech 96,000 Leased Livingston, Scotland FoodTech 87,000 Owned Parma, Italy FoodTech 62,000 Owned Navarra, Spain FoodTech 58,500 Owned Bridgend, Wales AeroTech 58,000 Owned Glinde, Germany FoodTech 55,000 Leased 25
Biggest changeThe following are significant production facilities for our operations: LOCATION SQUARE FEET (approximate) LEASED OR OWNED United States: Madera, California 271,000 Owned Lakeland, Florida 200,000 Owned Sandusky, Ohio 140,000 Owned Apex, North Carolina 134,200 Owned/Leased Columbus, Ohio 115,000 Leased Eastlake, Ohio 106,000 Leased Kingston, New York 98,000 Owned Stratford, Wisconsin 80,800 Owned Middletown, Ohio 73,000 Leased Chalfont, Pennsylvania 67,000 Leased Alpharetta, Georgia 65,000 Leased Russellville, Arkansas 65,000 Owned Riverside, California 50,000 Leased International: Sint Niklaas, Belgium 289,000 Owned Helsingborg, Sweden 228,000 Owned/Leased Werther, Germany 164,000 Owned Araraquara, Brazil 128,000 Owned Adlington, England 97,000 Owned Amsterdam, The Netherlands 96,000 Leased Livingston, Scotland 87,000 Owned Parma, Italy 62,000 Owned Navarra, Spain 58,500 Owned Glinde, Germany 55,000 Leased 28

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn many lawsuits and arbitrations, it is not considered probable that a liability has been incurred or not possible to estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no liability would be recognized until that time. 26 ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 27 PART II
Biggest changeIn many lawsuits and arbitrations, it is not considered probable that a liability has been incurred or not possible to estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no liability would be recognized until that time. 29 ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters 28 Item 6. [Reserved] 30 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Qualitative and Quantitative Disclosures About Market Risk 41 Item 8. Financial Statements and Supplementary Data 43
Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant’s Common Equity , Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. [Reserved] 33 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Qualitative and Quantitative Disclosures About Market Risk 45 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThese indices are included for comparative purposes only and do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative performance of the stock involved, and are not intended to forecast or be indicative of possible future performance of the common stock. 28 Issuer purchases of Equity Securities The following table includes information about the Company’s stock repurchases during the three months ended December 31, 2022 based on the settlement dates of each share repurchase: (Dollars in millions, except per share amounts) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as part of Publicly Announced Program (1) Approximate Dollar Value of Shares that may yet be Purchased under the Program October 1, 2022 through October 31, 2022 — $ — — $ 27.3 November 1, 2022 through November 30, 2022 53,543 90.87 53,543 22.4 December 1, 2022 through December 31, 2022 1,523 88.95 1,523 22.3 55,066 $ 90.87 55,066 $ 22.3 (1) Shares that may be repurchased under a share repurchase program for up to $30 million of common stock that was authorized by the Board of Directors on December 1, 2021 and is set to expire on December 31, 2024.
Biggest changeThese indices are included for comparative purposes only and do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative performance of the stock involved, and are not intended to forecast or be indicative of possible future performance of the common stock. 31 Issuer Purchases of Equity Securities The following table includes information about the Company’s stock repurchases during the three months ended December 31, 2023 based on the settlement dates of each share repurchase: (Dollars in millions, except per share amounts) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as part of Publicly Announced Program (1) Approximate Dollar Value of Shares that may yet be Purchased under the Program October 1, 2023 through October 31, 2023 19,757 $ 102.82 19,757 $ 20.3 November 1, 2023 through November 30, 2023 30,235 102.35 30,235 17.2 December 1, 2023 through December 31, 2023 — — — 17.2 49,992 $ 102.54 49,992 $ 17.2 (1) Shares that may be repurchased under a share repurchase program for up to $30 million of common stock that was authorized by the Board of Directors on December 1, 2021 and is set to expire on December 31, 2024.
The following graph shows the cumulative total return of an investment of $100 (and reinvestment of any dividends thereafter) on December 31, 2017 in: (i) the Company's common stock, (ii) the S&P Smallcap 600 Stock Index and (iii) the S&P 1500 Industrial Machinery index.
The following graph shows the cumulative total return of an investment of $100 (and reinvestment of any dividends thereafter) on December 31, 2018 in: (i) the Company's common stock, (ii) the S&P Smallcap 600 Stock Index and (iii) the S&P 1500 Industrial Machinery index.
Shares may be purchased from time to time in open market transactions, subject to market conditions. Repurchased shares become treasury shares, which are accounted for using the cost method and are intended to be used for future awards under the Incentive Compensation Plan. 29
Shares may be purchased from time to time in open market transactions, subject to market conditions. Repurchased shares become treasury shares, which are accounted for using the cost method and are intended to be used for future awards under the Incentive Compensation Plan. 32
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is listed on the New York Stock Exchange under the symbol JBT. As of February 16, 2023, there were 1,226 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock is listed on the New York Stock Exchange under the symbol JBT. As of February 16, 2024, there were 1,159 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRestructuring of the Notes to Consolidated Financial Statements. 34 OPERATING RESULTS OF BUSINESS SEGMENTS Year Ended December 31, Favorable / (Unfavorable) (In millions) 2022 2021 Change Change % Revenue FoodTech $ 1,590.6 $ 1,400.4 $ 190.2 13.6% AeroTech 575.7 467.5 108.2 23.1% Other revenue and intercompany eliminations (0.3) 0.4 (0.7) (175.0)% Total revenue $ 2,166.0 $ 1,868.3 $ 297.7 15.9% Income before income taxes Segment operating profit (1)(2) : FoodTech $ 211.5 $ 187.0 $ 24.5 13.1% FoodTech segment operating profit % 13.3% 13.4% -10 bps AeroTech 43.5 32.6 10.9 33.4% AeroTech segment operating profit % 7.6% 7.0% 60 bps Total segment operating profit 255.0 219.6 35.4 16.1% Total segment operating profit % 11.8% 11.8% 0 bps Corporate items: Corporate expense 79.6 53.9 (25.7) (47.7)% Restructuring expense 7.0 5.6 (1.4) (25.0)% Operating income 168.4 160.1 8.3 5.2% Operating income % 7.8% 8.6% -80 bps Pension (income) expense, other than service cost — (1.3) (1.3) 100.0% Interest expense, net 14.2 8.7 (5.5) (63.2)% Net income before income taxes 154.2 152.7 1.5 1.0% Income tax provision 23.5 34.3 10.8 31.5% Net income $ 130.7 $ 118.4 $ 12.3 10.4% (1) Refer to Note 19.
Biggest changeCONSOLIDATED RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2023 AND 2022 Year Ended December 31, Favorable / (Unfavorable) (In millions) 2023 2022 Change Change % Revenue $ 1,664.4 $ 1,590.3 $ 74.1 4.7% Cost of sales 1,078.7 1,060.9 (17.8) (1.7)% Gross profit 585.7 529.4 56.3 10.6% Gross Profit % 35.2% 33.3% 190 bps Selling, general and administrative expense 409.6 389.7 (19.9) (5.1)% Restructuring expense 11.4 7.1 (4.3) (60.6)% Operating income 164.7 132.6 32.1 24.2% Pension expense (income), other than service cost 0.7 — (0.7) (100.0)% Interest income 13.4 3.7 9.7 262.2% Interest expense 24.3 16.3 (8.0) (49.1)% Net income before income taxes 153.1 120.0 33.1 27.6% Income tax provision 23.5 16.2 (7.3) (45.1)% Equity in net earnings of unconsolidated affiliate (0.3) — (0.3) (100.0)% Income from continuing operations 129.3 103.8 25.5 24.6% Income from discontinued operations, net of taxes 453.3 33.6 419.7 1,249.1% Net income $ 582.6 $ 137.4 $ 445.2 324.0% Adjusted EBITDA from continuing operations (1) $ 273.1 $ 227.7 $ 45.4 19.9% Adjusted EBITDA % from continuing operations (1) 16.4 % 14.3 % 210 bps (1)The key measures reviewed by the CODM to evaluate our performance are most notably Adjusted EBITDA from continuing operations and Adjusted EBITDA % from continuing operations.
We utilize the input method of “cost-to-cost” to recognize revenue over time which requires that we measure progress based on costs incurred to date relative to total estimated cost at completion. These cost estimates are based on assumptions and estimates to project the outcome of future events including estimated labor and material costs required to complete open projects.
The input method of “cost-to-cost” to recognize revenue over time requires that we measure progress based on costs incurred to date relative to total estimated cost at completion. These cost estimates are based on assumptions and estimates to project the outcome of future events including estimated labor and material costs required to complete open projects.
As of December 31, 2022, we have four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025.
As of December 31, 2023, we have four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025.
For additional information about our credit agreement, Notes, convertible note hedge and warrant transactions, refer to Note 7. Debt of the Notes to Consolidated Financial Statements.
For additional information about our credit agreement, Notes, convertible note hedge and warrant transactions, refer to Note 8. Debt of the Notes to the Consolidated Financial Statements.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Overview We are a leading global technology solutions provider to high-value segments of the food and beverage industry. We design, produce, and service sophisticated products and systems for multi-national and regional customers through our FoodTech segment.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Executive Overview We are a leading global technology solutions provider to high-value segments of the food and beverage industry. We design, produce, and service sophisticated products and systems for multi-national and regional customers.
As of December 31, 2022, we were in compliance with all covenants in our credit agreement. We expect to remain in compliance with all covenants in the foreseeable future.
As of December 31, 2023, we were in compliance with all covenants in our credit agreement. We expect to remain in compliance with all covenants in the foreseeable future.
The Company completed the 2020 restructuring plan as of June 30, 2022. The total cost in connection with the 2020 restructuring plan was $11.0 million for FoodTech and $6.0 million for AeroTech. In the third quarter of 2022, the Company implemented a restructuring plan (the "2022/2023 restructuring plan") to optimize the overall FoodTech cost structure on a global basis.
The Company completed the 2020 restructuring plan as of June 30, 2022 and total cost in connection with the 2020 restructuring plan was $11.0 million. In the third quarter of 2022, the Company implemented a restructuring plan (the "2022/2023 restructuring plan") to optimize our overall cost structure on a global basis.
By using available non-U.S. cash to repay our debt on a short-term basis, we can optimize our leverage ratio, which has the effect of lowering our interest costs. For the year ended December 31, 2022, we had total operating cash flow of $142.3 million.
By using available non-U.S. cash to repay our debt on a short-term basis, we can optimize our leverage ratio, which has the effect of lowering our interest costs. For the year ended December 31, 2023, we had total operating cash flow of $74.2 million.
Our pension expense is sensitive to changes in our estimate of the expected rate of return on plan assets. The expected return on assets used in calculating the pension expense for the U.S. pension plan, which represents 94% of all pension plan assets, was 5.50% for 40 2022, 5.75% for 2021 and 5.0% for 2020.
Our pension expense is sensitive to changes in our estimate of the expected rate of return on plan assets. The expected return on assets used in calculating the pension expense for the U.S. pension plan, which represents 94% of all pension plan assets, was 6.25% for 2023, 5.50% for 2022 and 5.75% for 2021.
For 2023, the rate is expected to be 6.25%. A change of 50 basis points in the expected return on assets assumption would impact pension expense by $1.4 million (pre-tax). See Note 9. Pension and Post-Retirement and Other Benefit Plans of the notes to Consolidated Financial Statements in Item 8.
For 2024, the rate is expected to be 5.50%. A change of 50 basis points in the expected return on assets assumption would impact pension expense by $1.3 million (pre-tax). See Note 10. Pension and Post-Retirement and Other Benefit Plans of the notes to Consolidated Financial Statements in Item 8.
The discount rate used in calculating the projected benefit obligation for the U.S. pension plan, which represents 87% of all pension plan obligations, was 5.18% in 2022, 2.90% in 2021 and 2.57% in 2020. A decrease of 50 basis points in the discount rate used in our calculation would increase our projected benefit obligation by $11.9 million.
The discount rate used in calculating the projected benefit obligation for the U.S. pension plan, which represents 86% of all pension plan obligations, was 4.99% in 2023, 5.18% in 2022 and 2.90% in 2021. A decrease of 50 basis points in the discount rate used in our calculation would increase our projected benefit obligation by $11.7 million.
The Company experienced approximately a $25 million decrease in cash from operations in 2022 as a result and will experience approximately a $20 million decrease in cash from operations in 2023 The impact will continue over the five-year amortization period but decrease each year.
As a result, the Company experienced a decrease in cash from operations in 2023 of $16 million and will experience approximately a $10 million decrease in cash from operations in 2024. The impact will continue over the five-year amortization period but decrease each year.
Gross profit margins declined ~110 bps primarily due to the continued supply chain disruptions and pressures resulting in inefficiencies that drove ongoing increases in material, freight, and labor costs as well as due to a higher mix of organic revenue growth from lower-margin non-recurring revenue compared to recurring revenue.
The decrease was primarily due to supply chain disruptions and pressures resulting in inefficiencies that drove increases in material, freight, and labor costs as well as due to a higher mix of organic revenue growth from lower-margin non-recurring revenue compared to recurring revenue.
The following is a summary of other off-balance sheet arrangements at December 31, 2022: (In millions) Total Amount Current Long-Term Letters of credit and bank guarantees $ 33.7 $ 31.3 $ 2.4 Surety bonds 103.1 18.0 85.1 Total other off-balance sheet arrangements $ 136.8 $ 49.3 $ 87.5 To provide required security regarding our performance on certain contracts, we provide letters of credit, surety bonds and bank guarantees, for which we are contingently liable.
The following is a summary of other off-balance sheet arrangements at December 31, 2023: (In millions) Total Amount Current Long-Term Letters of credit and bank guarantees $ 25.1 $ 24.4 $ 0.7 Surety bonds 1.0 0.9 0.1 Total other off-balance sheet arrangements $ 26.1 $ 25.3 $ 0.8 To provide required security regarding our performance on certain contracts, we provide letters of credit, surety bonds and bank guarantees, for which we are contingently liable.
We are also continuing our strategic acquisition program focused on companies that add complementary products and technology solutions, which enable us to offer more comprehensive solutions to customers and meet our economic criteria for returns and synergies.
We are also continuing our strategic acquisition program focused on companies that add complementary products and technology solutions, which enable us to offer more comprehensive solutions to customers and meet our economic criteria for returns and synergies. On August 1, 2023, we completed the sale of the AeroTech business segment ("AeroTech").
We are investing to evolve our iOPS ® platform into a new digital solution called OmniBlu™, a customer-centric platform that delivers improved access to parts and service, advanced functionality, and measurable results for customers, while also expanding JBT's recurring revenue from aftermarket parts and services. • Margin Enhancement.
We continue to invest in our digital solution, OmniBlu™, a customer-centric platform that delivers improved access to inventory and service, advanced functionality, and measurable results for customers, while also expanding JBT's recurring revenue from aftermarket parts and services. • Margin Enhancement.
Revenue Recognition We recognize a large portion of our product revenue over time, for contracts that provide highly customized equipment and refurbishments of customer-owned equipment for which we have a contractual, enforceable right to collect payment upon customer cancellation for performance completed to date.
We believe that the following are the critical accounting estimates used in preparing our financial statements. 44 Revenue Recognition We recognize a large portion of our product revenue over time, using the "cost-to-cost" input method for contracts that provide highly customized equipment and refurbishments of customer-owned equipment for which we have a contractual, enforceable right to collect payment upon customer cancellation for performance completed to date.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed this disclosure. We believe that the following are the critical accounting estimates used in preparing our financial statements.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed this disclosure.
Liquidity and Capital Resources Overview of Sources and Uses of Cash Our primary sources of liquidity are cash flows provided by operating activities from our U.S. and foreign operations, borrowings from our revolving credit facility, and proceeds from the issuance of the convertible notes on May 28, 2021.
Our revenue and operating income are generally lower in the first quarter and highest in the fourth quarter, primarily as a result of our customers' purchasing trends. 41 Liquidity and Capital Resources Overview of Sources and Uses of Cash Our primary sources of liquidity are cash flows provided by operating activities from our U.S. and foreign operations, borrowings from our revolving credit facility, and proceeds from the issuance of the convertible notes on May 28, 2021.
Our liquidity as of December 31, 2022, or cash plus borrowing ability under our revolving credit facilities was $526.3 million.
Our liquidity as of December 31, 2023, or cash plus borrowing ability under our revolving credit facilities, was $1.2 billion.
Based on our current capital allocation objectives, during 2023 we anticipate capital expenditures to be between $60 million and $70 million, which includes about $12 million to $14 million of capitalized investment in our digital platform OmniBlu TM . Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.
Based on our current capital allocation objectives, during 2024 we anticipate capital expenditures to be between $50 million and $60 million. Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.
Use of Non-GAAP Financial Measures We present certain financial information on a constant currency basis in this annual report on Form 10-K to provide greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results, consistent with how management evaluates performance.
We also present certain financial information on a constant currency basis to provide greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results, consistent with how management evaluates performance. We evaluate our results of operations on both an as reported and a constant currency basis.
We maintain significant operations outside of the U.S., and many of our uses of cash for working capital, capital expenditures and business acquisitions arise in these foreign jurisdictions.
Although certain funds are considered permanently invested in our foreign subsidiaries, we are not presently aware of any restriction on the repatriation of these funds. We maintain significant operations outside of the U.S., and many of our uses of cash for working capital, capital expenditures and business acquisitions arise in these foreign jurisdictions.
As a result, as of December 31, 2022, a significant portion of our total outstanding debt of $987.1 million effectively remains fixed rate debt, with the Convertible Senior Notes subject to a fixed rate of 0.25% and a portion of the revolving credit facility subject to an average fixed rate of 0.82%.
As a result, as of December 31, 2023, all of our total outstanding debt of $652.5 million effectively remains fixed rate debt, with the Convertible Senior Notes subject to a fixed rate of 0.25% and all of the revolving credit facility subject to an average fixed rate of 0.76% in addition to the premium charged for the credit spread on our revolving credit facility.
We recognize the responsibility we have to make a positive impact on our shareholders, the environment and our communities in a manner that is consistent with our fiduciary duties. We have engaged in structured education for enhancing inclusive leadership skills in our organization designed to ensure more diversity in our leadership and hiring practices.
We recognize the responsibility we have to make a positive impact on our shareholders, the environment and our communities in a manner that is consistent with our fiduciary duties.
These purchase orders are generally short-term in nature and include a requirement that our supplier provide products or services to our specifications and require us to make a firm purchase commitment to our supplier.
We also have outstanding firm purchase orders with certain suppliers for the purchase of raw materials and services, which are not included in the table above. These purchase orders are generally short-term in nature and include a requirement that our supplier provide products or services to our specifications and require us to make a firm purchase commitment to our supplier.
Contractual Obligations and Cash Requirements The following is a summary of our significant contractual and other obligations at December 31, 2022: (In millions) Total Payments Current Long-Term Long-term debt (a) $ 977.3 $ — $ 977.3 Interest payments on long-term debt (b) 107.7 27.4 80.3 Operating leases (c) 48.0 12.8 35.2 Pension and other postretirement benefits (d) 197.2 18.1 179.1 Total contractual and other obligations $ 1,330.2 $ 58.3 $ 1,271.9 (a) A summary of our long-term debt obligations as of December 31, 2022 can be found in Note 7, “Debt”, of the Notes to the Consolidated Financial Statements.
Contractual Obligations and Cash Requirements The following is a summary of our significant contractual and other obligations at December 31, 2023: (In millions) Total Payments Current Long-Term Long-term debt (a) $ 646.4 $ — $ 646.4 Interest payments on long-term debt (b) 15.9 5.6 10.3 Operating leases (c) 44.1 13.8 30.3 Total contractual and other obligations (d) $ 706.4 $ 19.4 $ 687.0 (a) A summary of our long-term debt obligations as of December 31, 2023 can be found in Note 8, “Debt”, of the Notes to the Consolidated Financial Statements.
Inbound orders for our AeroTech segment increased by $42.1 million for the year ended December 31, 2022 compared to 2021, which includes an unfavorable foreign currency translation impact of $3.3 million in the period resulting in an increase of $45.4 million on a constant currency basis. 36 Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders as of December 31, (In millions) 2022 2021 FoodTech $ 664.4 $ 635.0 AeroTech 390.5 371.7 Total order backlog $ 1,054.9 $ 1,006.7 Order backlog in our FoodTech segment at December 31, 2022 increased by $29.4 million compared to December 31, 2021.
Inbound orders from continuing operations increased $80.1 million for the year ended December 31, 2023 compared to 2022, which includes an unfavorable foreign currency translation impact of $3.7 million in the period resulting in an increase of $83.8 million on a constant currency basis. Order backlog is calculated as the estimated sales value of unfilled, confirmed customer orders.
Our FoodTech equipment and technologies continue to deliver quality performance while striving to minimize food waste, extend food product life, and maximize efficiency in order to create shared value for our food and beverage customers. Our AeroTech equipment business offers a variety of power options, including electrically powered ground support equipment, that help customers meet their environmental objectives.
Our equipment and technologies continue to deliver quality performance while striving to minimize food waste, extend food product life, support customer sustainability objectives, and maximize efficiency in order to create shared value for our food and beverage customers.
Financing Arrangements As of December 31, 2022 we had $584.6 million drawn on and $709.0 million of availability under the revolving credit facility. Our ability to use this availability is limited by the restrictive covenants described below.
Financing Arrangements As of December 31, 2023 we had $250.0 million drawn on and $1,043.8 million of availability under the revolving credit facility. Our ability to use this availability is subject to our compliance with the leverage ratio covenant described below.
This increase is primarily driven by higher borrowings to fund acquisitions in the current year, partially offset by prior year activity that did not recur in the current year.
Cash provided by financing activities of $270.6 million in 2022 represents an increase of $189.8 million compared to 2021. This increase was primarily driven by higher borrowings to fund acquisitions in 2022, partially offset by prior year activity that did not recur in the current year.
We expect to convert 84% of FoodTech backlog at December 31, 2022 into revenue during 2023. Order backlog in our AeroTech segment at December 31, 2022 increased by $18.8 million compared to December 31, 2021. We expect to convert 84% of the AeroTech backlog at December 31, 2022 into revenue during 2023. Seasonality We experience seasonality in our operating results.
Order backlog from continuing operations was $678.2 million and $664.4 million as of December 31, 2023 and 2022, respectively. Order backlog from continuing operations at December 31, 2023 increased by $13.8 million compared to December 31, 2022. We expect to convert 93% of backlog at December 31, 2023 into revenue during 2024. Seasonality We experience seasonality in our operating results.
As such, we are required to make certain estimates, judgments and assumptions about matters that are inherently uncertain.
Critical Accounting Estimates We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions about matters that are inherently uncertain.
The following table details the cumulative amount of annualized and incremental savings for the 2020 restructuring plan: Cumulative Amount Incremental Amount Cumulative Amount (In millions) As of December 31, 2021 During the year ended December 31, 2022 As of December 31, 2022 Cost of sales $ 5.0 $ 1.4 $ 6.4 Selling, general and administrative 1.9 0.8 2.7 Total restructuring savings $ 6.9 $ 2.2 $ 9.1 For the 2020 restructuring plan, incremental cost savings has been completed as of June 30, 2022.
The following table details the cumulative amount of annualized savings and incremental savings for the 2022/2023 restructuring plan: Cumulative Amount Incremental Amount Cumulative Amount (In millions) As of December 31, 2022 During the year ended December 31, 2023 As of December 31, 2023 Cost of sales $ 0.1 $ 4.8 $ 4.9 Selling, general and administrative 0.1 6.1 6.2 Total restructuring savings $ 0.2 $ 10.9 $ 11.1 Cumulative savings for the 2022/2023 restructuring plan were revised in the second quarter from the range of $9.0 million to $12.0 million to a range of $18.0 million to $20.0 million to reflect the impact of additional actions being taken to streamline operations.
(b) Interest payments were determined using the weighted average rates for all debt outstanding as of December 31, 2022. (c) A summary of our operating lease obligations as of December 31, 2022 can be found in Note 18, “Leases”, of the Notes to the Consolidated Financial Statements. (d) This amount reflects planned contributions in 2023 to our pension plans.
(b) Amounts include contractual interest payments using the interest rates as of December 31, 2023 and include the effect of our interest rate swaps. 42 (c) A summary of our operating lease obligations as of December 31, 2023 can be found in Note 19, “Leases”, of the Notes to the Consolidated Financial Statements.
We also sell critical equipment and services to domestic and international air transportation customers through our AeroTech segment. In early 2022, we announced our Elevate 2.0 strategy that capitalizes on favorable trends, as well as our leadership position, in the food and beverage processing industry.
In early 2022, we announced our Elevate 2.0 strategy that capitalizes on favorable trends, as well as our leadership position, in the food and beverage processing industry. This strategy is based on a four-pronged approach to deliver continued growth and margin expansion. • Organic Growth .
Cash required by investing activities during 2022 was $416.1 million, representing a $143.2 million increase compared to 2021, primarily due to increased acquisition and capital expenditure spending year over year. Cash provided by financing activities of $270.6 million in 2022 represents an increase of $189.8 million compared to same period in 2021.
Decrease was primarily driven by a decrease in customer advance payments and an increase in inventory, partially offset by lower pension contributions and an increase in accounts payable. Cash required by investing activities during 2022 was $413.2 million, representing a $142.7 million increase compared to 2021, primarily due to increased acquisition and capital expenditure spending year over year.
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation excludes the impact of fluctuations in foreign currency exchange rates. We calculate constant currency percentages by converting our financial results in local currency for a period using the average exchange rate for the prior period to which we are comparing.
We calculate constant currency percentages by converting our financial results in local currency for a period using the average exchange rate for the prior period to which we are comparing. 40 Restructuring In the third quarter of 2020, the Company implemented a restructuring plan ("2020 restructuring plan") for manufacturing capacity rationalization across the Company.
Increase in net interest expense was primarily due to higher interest rates as well as a higher average debt balance to fund the acquisitions in the third quarter of 2022.
The increase was primarily due to higher interest rates as well as a higher average debt balance used to fund the acquisitions in the third quarter of 2022. 38 Income tax provision The Company's tax rate from continuing operations was 13.5% for the year ended December 31, 2022 compared to 22.6% for 2021.
This strategy is based on a four-pronged approach to deliver continued growth and margin expansion. • Organic Growth . Our broad application knowledge, engineering expertise, and global sales and service allow us to work alongside our customers to develop critical FoodTech products and solutions across a diverse set of food & beverage end markets.
Our broad application knowledge, engineering expertise, and global sales and service allow us to work alongside our customers to develop critical products and solutions across a diverse set of food & beverage end markets. JBT is benefiting from strong commercial and market trends, which create meaningful opportunities for continued new product innovation and R&D in support of our customers' needs.
Historically, our commercial commitments have not been drawn upon to a material extent; consequently, management believes it is not likely that there will be claims against these commitments that would result in a negative impact on our key financial ratios or our ability to obtain financing. 38 Cash Flows Cash flows for each of the years ended December 31, 2022 and 2021 were as follows: (In millions) 2022 2021 Cash provided by operating activities $ 142.3 $ 225.7 Cash required by investing activities (416.1) (272.9) Cash provided by financing activities 270.6 80.8 Effect of foreign exchange rate changes on cash and cash equivalents (2.5) (2.3) (Decrease) increase in cash and cash equivalents $ (5.7) $ 31.3 2022 Compared with 2021 Cash provided by continuing operating activities in 2022 was $142.3 million, representing a $83.4 million decrease compared to 2021.
Cash Flows Cash flows for each of the years ended December 31, 2023 and 2022 were as follows: (In millions) 2023 2022 2021 Cash provided by continuing operating activities $ 74.2 $ 135.2 $ 174.9 Cash provided (required) by continuing investing activities 729.3 (413.2) (270.5) Cash (required) provided by continuing financing activities (354.1) 270.6 80.8 Effect of foreign exchange rate changes on cash and cash equivalents (1.2) (2.5) (2.3) Net increase (decrease) in cash from continuing operations $ 448.2 $ (9.9) $ (17.1) 2023 Compared with 2022 Cash provided by continuing operating activities in 2023 was $74.2 million, representing a $61.0 million decrease compared to 2022.
We believe JBT's strong balance sheet, operating cash flows, and access to capital as of December 31, 2022, positions us to successfully navigate through the current challenging economic conditions as we continue to invest in growth strategies including our acquisition program and new product development. 37 Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures in the U.S. over five years.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures in the U.S. over five years.
Selling, general and administrative expense increased $22.3 million from prior year, including $15.9 million from acquired companies, but as a percent of revenue improved 115 bps to 20.1%. 35 AeroTech 2022 Compared With 2021 AeroTech's revenue increased $108.2 million or 23.1% compared to 2021.
Selling, general and administrative expense Selling, general and administrative expense increased $38.3 million from prior year, and as a percent of revenue increased by 60 bps to 24.5% compared to 25.1% in 2021.
JBT is operating in commercial markets which we believe over the long term create meaningful opportunities for continued new product innovation and R&D in support of our customers’ needs. Additionally, our cross-selling abilities, investment opportunities in developing geographies, and aftermarket capabilities provide meaningful growth opportunities for FoodTech globally. • Digital Transformation.
Additionally, our cross-selling abilities, investment opportunities in developing geographies, and aftermarket capabilities provide meaningful growth opportunities for us globally. • Digital Transformation.
Organic revenue grew $282.0 million in the period, acquisitions provided additional revenue of $93.5 million, and foreign currency translation was unfavorable by $77.8 million in the period compared to the prior year. Growth from organic revenue was the result of increases in both recurring and non-recurring revenues.
For additional information, refer to the 'Reconciliation of Non-GAAP Measures' section below. 2022 Compared With 2021 Revenue Total revenue in 2022 increased $189.5 million or 13.5% compared to 2021. Organic revenue grew $171.8 million in the period and acquisitions provided additional revenue of $93.5 million, partially offset by unfavorable currency translation of $75.8 million compared to the prior year.
CONSOLIDATED RESULTS OF OPERATIONS Year Ended December 31, Favorable / (Unfavorable) (In millions) 2022 2021 Change Change % Revenue $ 2,166.0 $ 1,868.3 $ 297.7 15.9% Cost of sales 1,548.7 1,301.5 (247.2) (19.0)% Gross profit 617.3 566.8 50.5 8.9% Gross Profit % 28.5% 30.3% -180 bps Selling, general and administrative expense 441.9 401.1 (40.8) (10.2)% Restructuring expense 7.0 5.6 (1.4) (25.0)% Operating income 168.4 160.1 8.3 5.2% Operating income % 7.8% 8.6% -80 bps Pension (income) expense, other than service cost — (1.3) (1.3) 100.0% Interest expense, net 14.2 8.7 (5.5) (63.2)% Net income before income taxes 154.2 152.7 1.5 1.0% Income tax provision 23.5 34.3 10.8 31.5% Net income $ 130.7 $ 118.4 $ 12.3 10.4% 2022 Compared With 2021 Total revenue in 2022 increased $297.7 million or 15.9% compared to 2021.
CONSOLIDATED RESULTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2022 AND 2021 Year Ended December 31, Favorable / (Unfavorable) (In millions) 2022 2021 Change Change % Revenue $ 1,590.3 $ 1,400.8 $ 189.5 13.5% Cost of sales 1,060.9 918.7 (142.2) (15.5)% Gross profit 529.4 482.1 47.3 9.8% Gross Profit % 33.3% 34.4% -110 bps Selling, general and administrative expense 389.7 351.4 (38.3) (10.9)% Restructuring expense 7.1 5.1 (2.0) (39.2)% Operating income 132.6 125.6 7.0 5.6% Pension expense (income), other than service cost — (1.3) (1.3) (100.0)% Interest income 3.7 3.8 (0.1) (2.6)% Interest expense 16.3 11.2 (5.1) (45.5)% Net income before income taxes 120.0 119.5 0.5 0.4% Income tax provision 16.2 27.0 10.8 40.0% Income from continuing operations 103.8 92.5 11.3 12.2% Income from discontinued operations, net of taxes 33.6 26.6 7.0 26.3% Net income $ 137.4 $ 119.1 $ 18.3 15.4% Adjusted EBITDA from continuing operations (1) $ 227.7 $ 212.2 $ 15.5 7.3% Adjusted EBITDA % from continuing operations (1) 14.3% 15.1% -80 bps (1)The key measures reviewed by the CODM to evaluate our performance are most notably Adjusted EBITDA from continuing operations and Adjusted EBITDA % from continuing operations.
The initiatives under this plan will include streamlining operations and our general and administrative infrastructure. As of December 31, 2022, the cost of this plan is $5.4 million and we estimate the total cost of full implementation will be in the range of $8.0 million to $10.0 million expected to be recognized by the end of 2023.
The initiatives under this plan include streamlining operations and our general and administrative infrastructure. As of December 31, 2023, the Company recognized restructuring charges of $16.8 million, net of a cumulative release of the related liability of $6.5 million.
Operating profit margin declined 10 bps primarily due to a decline in gross profit margin partially offset by an improved selling general and administrative expense as a percent of revenue compared to 2021.
Selling, general and administrative expense Selling, general and administrative expense increased $19.9 million from prior year, and as a percent of revenue increased by 10 bps to 24.6% compared to 24.5% in 2022.
Additionally, gross profit margin declined due to more growth in lower-margin AeroTech revenue compared to FoodTech revenue, as well as a higher mix in both segments of lower-margin non-recurring revenue compared to recurring revenue. • Selling, general and administrative expense increased $40.8 million from prior year driven by higher costs attributable to recently acquired businesses as well as costs related to the implementation of OmniBlu TM .
The increase in Selling, general and administrative expense was the result of higher relative expenses from recently acquired companies, including higher amortization costs of acquired intangible assets, as well as the costs related to the implementation of the OmniBlu TM platform. Interest expense Interest expense increased $5.1 million compared to 2021.
Removed
In pursuit of the above strategy, we are considering a full range of strategic alternatives for AeroTech and expect to complete our strategic assessment in the first half of 2023.
Added
This sale was completed pursuant to the Stock and Asset Purchase Agreement, dated May 26, 2023, to sell AeroTech to Oshkosh Corporation. This divestiture supports the Company's strategy to become a pure-play food and beverage solutions provider. For additional information, refer to Note 2. Discontinued Operations of the Notes to the Consolidated Financial Statements.
Removed
We evaluate our operating results considering key performance indicators including segment operating profit, segment operating profit margin, segment EBITDA (adjusted when appropriate) and segment EBITDA margins. 31 Business Conditions and Outlook I n terms of top–line growth, the commercial environment in 2022 was characterized by strong demand for our goods and services, particularly in North America.
Added
We have engaged in structured education for enhancing inclusive leadership skills in our organization designed to ensure more diversity in our leadership and hiring practices. 34 Business Conditions and Outlook Our operational performance was strong in 2023 despite a mixed commercial environment. We experienced healthy equipment demand across diverse end markets, including beverages, warehouse automation, and pharmaceuticals and nutraceuticals.
Removed
Higher demand in FoodTech is driven primarily by our customer's needs for greater capacity, labor savings, yield, food safety and sustainability. On the AeroTech side, we continued to experience a strong recovery in our served markets.
Added
Meanwhile, this was offset by the impact of higher interest rates and market dynamics in the poultry industry which affected customers' investment. Our aftermarket parts and service model remained resilient with year-over-year growth in recurring revenue. Our operating margins improved meaningfully compared to 2022, driven by improved price-cost realizations, restructuring program savings, and strategic sourcing initiatives.
Removed
Looking ahead, we anticipate continued revenue growth in 2023 due to sustained momentum in overall customer demand for our products and services, a strong backlog entering into 2023 and a mix of recurring revenue streams consistent with prior years.
Added
Looking ahead, we expect the demand environment to improve in 2024 as interest rates decline, poultry market dynamics continue to improve as well as benefit from our organic growth initiatives. Additionally, we expect our margins to continue to increase as we realize benefits from our continuous improvement efforts, restructuring program savings, and strategic sourcing initiatives.
Removed
Despite significant growth in our revenues, our operating margins declined due to the challenges associated with supply chain disruptions, high inflation, and labor availability affecting both FoodTech and AeroTech.
Added
Components of Results of Operations Revenue We derive our revenue from sales or operating leases of equipment as well as sales of related aftermarket goods and services and software.
Removed
While our JBT operating system enables us to plan and optimize production efficiency, continued supply chain disruptions and labor shortages has often resulted in the stop and start of production based on availability of critical parts and components.
Added
Revenue from equipment and software licenses is considered as non-recurring, whereas revenue from aftermarket goods and services, re-build service for customer-owned equipment, operating lease of equipment, and subscription-based software applications is considered as recurring.
Removed
However, we expect an improvement in our supply chain performance and for inflation to moderate as we continue to take action to address these challenges. These include making productivity improvements in our production plants, expanding our supplier network, and implementing price increases which have generally been successful in offsetting some, but not all, of the impact of these challenges.
Added
Cost of Sales Cost of sales are costs that are directly related to the procurement and manufacturing of equipment and parts sold, services provided, and other direct costs incurred to fulfill contracts with customers.
Removed
As a result of the war in Ukraine, we have suspended commercial activities in Russia, Belarus and occupied regions of Ukraine since March 2022.
Added
Costs include direct costs, such as labor and raw materials and indirect costs such as manufacturing overhead and amortization of capitalized software to be sold, and patents and acquired technology intangible assets. Selling, General and Administrative Selling expense primarily consists of employee-related expenses for sales, marketing and public relations employees.
Removed
This consisted of ceasing our efforts to seek new business opportunities in these areas, as well as suspending any in-process projects to allow for an assessment of our ability to complete those projects and to receive payments in full compliance with applicable sanction programs, and without risk to our personnel and subcontractors.
Added
Selling expense also includes trade show, market research, advertising and other related external marketing expense as well as office and software related costs to support sales. General and administrative expense consists of employee-related expenses, stock based compensation and other expenses that support finance, human resource, legal, and internal-use information technology functions at our business units and our corporate offices.
Removed
The direct impact of these actions to our consolidated results of operations is and is expected to remain immaterial. Furthermore, we have no direct active operations in any of these countries or regions. 32 Results of Continuing Operations A discussion of our results of operations for 2022 compared to 2021 is set forth below.
Added
General and administrative expense incurred at our corporate offices, including the impact of unusual or strategic events not representative of operations, as well as stock based compensation for all employees are considered as our corporate expenses. Restructuring expense Restructuring expense consists of costs from our 2022/2023 Restructuring Plan. For additional financial information about restructuring, refer to Note 20.
Removed
For a discussion of our results of operations, including our segment results of operations, for 2021 compared to 2020, refer to the discussion under the sub-caption "2021 Compared With 2020" in Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10–K for the fiscal year ended December 31, 2021, which discussion is incorporated by reference herein.
Added
Restructuring of the Notes to the Consolidated Financial Statements. Pension expense, other than service cost s Pension expense, other than service costs are related to our domestic and foreign defined benefit pension and other post-employment benefit plans. Interest income Interest income consists of interest earned on our cash equivalents and short-term marketable securities.
Removed
Operating income margin was 7.8% in 2022 compared to 8.6% in 2021, a decrease of 80 bps, and was caused by the following items: • Gross profit margin decreased 180 bps to 28.5% compared to 30.3% in 2021. This decrease was in part due to ongoing supply chain disruptions and resulting inefficiencies driving increases in material, logistics and labor costs.
Added
Interest expense Interest expense consists of interest expense on our outstanding debt obligations including amortization of debt discounts and offering costs. 35 Results of Continuing Operations A discussion of our results of operations for 2023 compared to 2022 is set forth below.
Removed
It improved, however, as a percentage of total revenue by 110 bps to 20.4% compared to 21.5% in the same period last year. • Currency translation decreased operating income by $9.6 million.
Added
For additional information, refer to the 'Reconciliation of Non-GAAP Measures' section below. 2023 Compared With 2022 Revenue Total revenue in 2023 increased $74.1 million or 4.7% compared to 2022. Acquisitions provided additional revenue of $76.8 million, organic revenue grew by $4.7 million, and foreign currency translation was unfavorable by $7.4 million compared to the prior year.
Removed
Income tax expense for 2022 reflected an effective income tax rate of 15.3% compared to 22.4% in 2021, primarily driven by beneficial discrete items. 33 Restructuring In the third quarter of 2020, the Company implemented a restructuring plan ("2020 restructuring plan") for manufacturing capacity rationalization affecting both the FoodTech and AeroTech segments.
Added
Growth in organic revenue was the result of higher pricing as well as an increase in volume for recurring revenue, partially offset by a decrease in volume for non-recurring revenue. Gross Profit and Gross Profit Margin Gross profit margin increased 190 bps to 35.2% compared to 33.3% in 2022.
Removed
Cumulative savings associated with this plan is in the range of $9.0 million to $12.0 million with a range of $5.0 million to $6.0 million expected to be realized in 2023 and the remainder in 2024.
Added
The increase was driven primarily by higher pricing, savings from our restructuring plan, and favorable mix of higher recurring revenue, partially offset by the lost leverage of fixed costs from lower equipment volume year over year.
Removed
For additional financial information about restructuring, refer to Note 20.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−4 removed10 unchanged
Biggest changeAs of December 31, 2022, we had four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025.
Biggest changeMarket Risk and Interest Rate Risk As of December 31, 2023, we had four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025.
Financial statements of our foreign subsidiaries for which the U.S. dollar is not the functional currency are translated into U.S. dollars. As a result, we are exposed to foreign currency translation risk. When we sell or purchase products or services, transactions are frequently denominated in currencies other than an operation’s functional currency.
Financial statements of our foreign subsidiaries for which the U.S. dollar is not the functional currency are translated into U.S. dollars. As a result, we are exposed to foreign currency translation risk. 45 When we sell or purchase products or services, transactions are frequently denominated in currencies other than an operation’s functional currency.
We do not use derivative financial instruments where the objective is to generate profits solely from trading activities. At December 31, 2022 and 2021, our derivative holdings consisted of foreign currency forward contracts and foreign currency instruments embedded in purchase and sale contracts and interest rate swap contracts.
We do not use derivative financial instruments where the objective is to generate profits solely from trading activities. At December 31, 2023 and 2022, our derivative holdings consisted of foreign currency forward contracts and foreign currency instruments embedded in purchase and sale contracts and interest rate swap contracts.
Additionally, we carry the Notes at face value, less any unamortized issuance costs, on the balance sheet and present the fair value for disclosure purposes only. 42
Additionally, we carry the Notes at face value, less any unamortized issuance costs, on the balance sheet and present the fair value for disclosure purposes only. 46
These forward-looking disclosures address potential impacts from market risks only as they affect our financial instruments. They do not include other potential effects resulting from changes in foreign currency exchange rates, interest rates, commodity prices or equity prices that could impact our business. Foreign Currency Exchange Rate Risk During 2022, our foreign subsidiaries generated 36% of our revenue.
These forward-looking disclosures address potential impacts from market risks only as they affect our financial instruments. They do not include other potential effects resulting from changes in foreign currency exchange rates, interest rates, commodity prices or equity prices that could impact our business. Foreign Currency Exchange Rate Risk During 2023, our foreign subsidiaries generated 43% of our revenue.
This analysis was based on a modeling technique that measures the hypothetical market value resulting from a 50 basis point change in interest rates. This adverse change in the applicable interest rates would result in a decrease of $2.5 million in the net fair value of our interest rate swaps for $250 million of notional value expiring in 2025.
This analysis was based on a modeling technique that measures the hypothetical market value resulting from a 50 basis point change in interest rates. This adverse change in the applicable interest rates would result in a decrease of $1.4 million in the net fair value of our interest rate swaps for $250 million of notional value expiring in 2025.
A 10% adverse movement in the foreign currency exchange rates would reduce the value of our derivative instruments by $5.1 million (pre-tax) as of December 31, 2022. This amount would be reflected in our net income but would be significantly offset by the changes in the fair value of the underlying hedged assets and liabilities.
A 10% adverse movement in the foreign currency exchange rates would reduce the value of our derivative instruments by $7.4 million (pre-tax) as of December 31, 2023. This amount would be reflected in our net income but would be significantly offset by the changes in the fair value of the underlying hedged assets and liabilities.
Removed
In July 2018, we entered into a series of cross-currency swaps with an aggregate notional of $116.4 million (€100 million) to hedge the currency exchange component of net investments in certain foreign subsidiaries. The aggregate fair value of these swaps was an asset position of $9.9 million at December 31, 2022.
Removed
We use a sensitivity analysis to measure the impact of an immediate 10% adverse movement in the foreign currency exchange rates underlying these swaps.
Removed
A hypothetical 10% adverse movement in the currency exchange rates underlying these swaps from the market rate at December 31, 2022 would have resulted in a loss in value of the swaps by $10.7 million. 41 Market Risk and Interest Rate Risk Our borrowings from the revolving credit facility subject us to market risk associated with movements in interest rates.
Removed
We had $334.6 million in variable rate debt outstanding at December 31, 2022. A hypothetical 10% adverse movement in the interest rate will increase our annual interest expense by $1.7 million.

Other JBTM 10-K year-over-year comparisons