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JBT Corporation (JBT) Q1 2021 Earnings Call Transcript

By Motley Fool Transcribers - Apr 27, 2021 at 2:30PM

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JBT earnings call for the period ending March 31, 2021.

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JBT Corporation (JBT -1.15%)
Q1 2021 Earnings Call
Apr 27, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to JBT Corporation's First Quarter 2021 Earnings Conference Call. My name is Megan and I will be your conference operator today. [Operator Instructions]

I will now turn the call over to JBT's Vice President of Investor Relations, Megan Rattigan. You may begin.

Megan Rattigan -- Vice President, Investor Relations and Controller

Thank you Megan. Good morning everyone and welcome to our first quarter 2021 conference call. With me on the call is our Chief Executive Officer, Brian Deck; and Chief Financial Officer, Matt Meister.

In today's call, we will use forward-looking statements that are subject to the safe harbor language in yesterday's press release and 8-K filing. JBT's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available in the Investor Relations section of our website.

Also our discussion today includes references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure can be found in the press release issued last night, which is also in the Investor Relations section of our website.

Now I'd like to turn the call over to Brian.

Brian A. Deck -- President and Chief Executive Officer

Thanks, Megan, and good morning everyone. As you saw from our earnings release, JBT delivered a very good first quarter. Commercially, we are enjoying a strong recovery in demand at FoodTech, with record orders in the period. Cash flow was outstanding. We also saw some encouraging signs at AeroTech.

On the other hand, we are experiencing increasing operational challenges created by supply chain constraints, inflationary pressures and COVID related customer access in select geographies, pressures that will likely persist through the remainder of 2021. That said, I am extremely proud of how well our people from sales to customer care to manufacturing and procurement have managed this environment. And we continue to expect a meaningful sequential ramp in our performance through the next three quarters.

Matt will walk you through our updated guidance for the full year as well as provide analysis on our first quarter results.

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Thanks, Brian. We are pleased with our first quarter performance. In the quarter, we saw strong quarter growth in FoodTech at 22% year-over-year. Revenue met our forecast and both earnings per share and free cash flow exceeded our expectations. On a year-over-year basis, revenue increased 1% at FoodTech, while declining 28% at AeroTech. FoodTech margins were in line with guidance, with operating margins of 13.3% and adjusted EBITDA margins of 18.7%. AeroTech margins were ahead of expectations, with operating margins of 9.3% and adjusted EBITDA margins of 10.7%. The better than forecasted margins were the result of favorable equipment mix, better than expected aftermarket revenue and good cost control.

Earnings in the quarter also benefited from lower interest expense as continued strong cash flow reduced our debt balance. Additionally, corporate expense, M&A and restructuring costs were slightly favorable to guidance. As a result, JBT posted adjusted diluted earnings per share from continuing operations of $0.90 or GAAP EPS of $0.84. Free cash flow for the quarter significantly exceeded our expectations at $78 million, driven by continued strong collection of accounts receivable and customer deposits. The robust cash flow performance improved our bank leverage ratio to 1.9 times and increased overall liquidity to $496 million. We expect to expand our balance sheet to support an increase in sales in the back half of the year to achieve full year free cash flow conversion just above 100%.

As we look ahead to full year 2021, while we are benefiting from strong commercial activity, challenges in the operating environment are expected to increase further as we work through extended vendor lead times, worldwide constraints on logistics and inflationary pressure specifically on metals as well as COVID travel and access restrictions in Europe and Asia Pacific that increase the cost of doing business. With that in mind, we have refined our full-year 2021 guidance. Given the strength of orders and outlook for FoodTech we have raised, topline growth to 9% to 11%, up from our previous guidance of 5% to 8%. However, while we expect to be able to mostly offset inflationary input costs with sourcing actions and pricing, the operational challenges I mentioned previously are expected to exert downward pressure on margins. Therefore, we have lowered full year margin guidance by 25 basis points. Operating margin of 14.25% to 14.75% and adjusted EBITDA margins of 19.25% to 19.75%.

Our guidance for AeroTech is unchanged with projected revenue growth of 0% to 5%. Operating margins of 10.75% to 11.25% and adjusted EBITDA margins of 12% to 12.5%. Due to the existing pricing commitments and current market conditions, in the short-term AeroTech is limited in its ability to adjust prices to offset inflationary conditions. Therefore, although, AeroTech exceeded margins in Q1, we have held our full year margin guidance. We are holding our forecast for corporate cost at 2.7% of sales, while lowering interest expense to about $11 million. Altogether, this increases the full year adjusted EPS range to $4.40 to $4.60. Our GAAP EPS guidance is now $4.20 to $4.40, with M&A and restructuring costs of $8 million to $10 million.

Now in terms of Q2. We expect revenue of $325 million to $340 million at FoodTech and $105 million to $115 million at AeroTech. Our second quarter guidance for operating margins are 13.75% to 14.25% at FoodTech, with adjusted EBITDA margins of 19% to 19.5%. For AeroTech, operating margins are forecasted at 8.75% to 9.25%, the adjusted EBITDA margins of 10% to 10.5%. For the quarter, we expect corporate costs of $12 million to $13 million, M&A and restructuring costs of $4 million, interest expense of about $3 million. Factoring second quarter's adjusted earnings per share guidance to $0.90 to $1 and $0.80 to $0.90 on a GAAP basis.

With that let me turn the call back to Brian.

Brian A. Deck -- President and Chief Executive Officer

Thanks, Matt. I'd like to start by talking about order trends and what we hear about the market from our customers' perspective. In the first quarter of 2021, FoodTech orders had a record $386 million. The pandemic driven boost to need at home, retail and quick service restaurant demand continued into the quarter, filling orders from food processors requiring additional capacity [Technical Issues] to serve these markets. From a geographic perspective, North America and the Asia Pacific region continued to be strong. South America improved meaningfully while demand in Europe remained volatile as the region was [Technical Issues] the challenges of the pandemic.

Our research and customer engagement confirms our expectations of double-digit expansion in capital expenditures along our FoodTech customers in 2021. This is consistent with our forecast for FoodTech equipment growth, which is expected to outpace our more stable recurring revenue. Beyond the current strength on the retail side, we believe progress controlling COVID particularly in the US will spur new projects in the foodservice side. Inquiries and conversations with customers serving the foodservice market has picked up. At the same time, the pandemic has accelerated customer investment in permanent [Phonetic] design changes, production flexibility, so producers can respond quickly to shifts in demand is increasingly important. Moreover, the pandemic serves to make automation, which was always a priority and imperative for food processors. Automation not only gets labor shortages and enhances productivity, but it is necessary to reduce worker density.

At AeroTech, although orders were down 35% compared to pre-pandemic levels a year ago, we've met our expectations and there are some encouraging signs. We continue to see stability and infrastructure side with our services and passenger boarding business. So with some construction related push out of bridge deliveries from Q2 to Q3, this is reflected in our guidance. And as we've discussed over the past few quarters, we're excited about the outlook for Cargo in 2021 and military demand longer term. Additionally, our engagement with commercial airlines improved in the quarter, resulting in a few equipment orders, something we have not seen since the collapse in passenger air travel in 2020. The recent increases in domestic consumer air travel in North America is a welcome sign. However, we believe prudently [Phonetic] in commercial airline capex spending will be gradual over the next two years.

Let me switch gears and talk about M&A. As we said last quarter, we're looking to deploy capital in 2021 and beyond as we evaluate strategic acquisitions that advance FoodTech's competitive position as an innovative comprehensive solution provider. Our M&A pipeline is active and includes opportunities to leverage JBT's capabilities and scale. We continue to look at equivalent providers to provide -- that enhance our ability to provide [Indecipherable] solutions as well as those that expand our penetration to attract the food categories. Additionally, with the company's of unique service, digital and process enhancing capabilities that enhance JBT's strategy to be a more meaningful solutions partner to our customers.

Overall we are reassured by the robust commercial activity of FoodTech and indications that AeroTech is on the upswing. While we have challenges ahead this year, caused by inventory supply chain imbalances, JBT and our people look forward to delivering in 2021.

With that, let's take your questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Your first question is from Walt Liptak with Seaport Global. Your line is open.

Walter Liptak -- Seaport Global -- Analyst

Hi, thanks and good morning, everybody.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Walter Liptak -- Seaport Global -- Analyst

Good quarter. I wanted to dig in a little bit on the FoodTech orders that look pretty good. I wonder -- you provided some details, but I wonder if you could talk a little bit more about sort of the product groups that you're seeing recovery in the past. You've talked about proteins versus liquid food, versus pet foods, if there is any trends that we can discern there? And I wondered about any customer concentration, are these large orders coming from some of the large food producers or is it from a lot of the food producer customers?

Brian A. Deck -- President and Chief Executive Officer

Sure. Thanks Walt. So generally speaking, it was pretty broad-based across the customer base. I think we've seen some strength both on the big side -- on the big customer side as well as some of the normal call mid-size and regional players. So pretty broad-based in terms of the -- the way we think of it on the demand side is we think of in terms of end product, in terms of where it's going to the consumer as well as the product that we actually provide. So if you look at the quarter, poultry was really strong in Q4 and remained strong in Q1. We saw real strength from meat alternatives, so beef and chicken alternatives was very strong. We saw good strength in seafood in non-poultry for meat and other meat items. And then good strength in fresh food applications as well.

From a product perspective freezing products were quite strong, marinating, portioning, tray sealing packaging was strong, cooking, coating, frying was strong and Candy [Phonetic] was strong. So fairly broad across the product line as well. So condition wise its probably the best we've seen in some time.

Walter Liptak -- Seaport Global -- Analyst

Okay. Yes, there were some very strong and broad. I wonder you mentioned new capacity. I wonder if there's any trends that you can discern about, is this new capacity going in, or is this new product development and new production lines that are going in?

Brian A. Deck -- President and Chief Executive Officer

I think it's a combination. But best we can say it is, I'll call it a catch up on some capacity constraints that our customers were seeing again to me I would say primarily the retail side as well as also serving some of the quick service restaurants, which have been a relative pretty strong in the back half of 2020 and into 2021, but predominantly, I would say capacity, but also, just remind you, when our customers consider capacity increase, they look at the offering that also provides good other value in terms of automation and food safety and all the other things that we bring with our value proposition. So it is a combination of factors, but the primary driver would be capacity.

Walter Liptak -- Seaport Global -- Analyst

Okay, sounds good. Maybe a last one, you kind of touched on this -- on these orders is, you've talked in the past about automation and IoT and using more of the technology. Are you starting to see that in some of these orders? And I'll get back in queue. Thank you.

Brian A. Deck -- President and Chief Executive Officer

Yes, absolutely we are. And I can tell you the conversations we -- I've had since being in this role with our CEOs, sorry, with our customer CEOs and COOs is that they are focused on automation and reducing labor and we've got a good value proposition across our offering. As I mentioned, we have a great IoT platform, we got great automation solutions, particularly in certain areas that we highlight to our customers. So the conversations have ramped up, but again, as you know, we offer such a good broad value proposition. We don't focus solely on automation on the conversations, we focus on everything else that we bring including the service side, which is really critical and I'm certainly our IoT platform adds to that value proposition.

Operator

Your next question is from Lawrence De Maria with William Blair. Your line is open.

Lawrence De Maria -- William Blair -- Analyst

Thanks, good morning everybody. Hi Brian.

Brian A. Deck -- President and Chief Executive Officer

Hey, Larry.

Lawrence De Maria -- William Blair -- Analyst

So, just following up on those comments on the food orders which obviously is exceptionally strong. I was trying to understand how much of 1Q orders might have been an anomaly with restocking etc or do we think that maybe we're at from sustainably high levels for a while given what you're talking about with the automation and IoT trends. Obviously record orders but also could be some restocking and getting in line because as everybody knows, there are [Indecipherable] time?

Brian A. Deck -- President and Chief Executive Officer

Sure, first I want assure restocking because these are still more configured orders, coal to order type projects that we've been working on for some time. Arguably, there was some pent-up demand from deferred investment in 2020. So that so much restocking, but just really filling the gaps from before. And it's hard to say kind of where the trends are going to go from here, Larry. The way I do you think of it if you go back to 2019 and look at kind of a normal order run rate for FoodTech is probably 3.40 to 3.50 and orders in a particular quarter. That's what I see as the baseline. Obviously, the last two quarters, we've been above that. It's too early to know how that's going to progress from here. But certainly, given the last two quarters, we're above that trend line and we'll see how that develops over the next quarter or two, but it's a good commercial market for sure.

Lawrence De Maria -- William Blair -- Analyst

Understood, thanks. And secondly, you touched on M&A, the $4 million this quarter, I think it was not going to change. last quarter in expenses. Obviously, the active pipeline just dive in a little bit closer to here are we thinking one larger deal is applied this $4 million spend or more smaller deals and still staying within the core secondary for the processing or maybe getting more horizontal into packaging etc. Just any more color to think about we can set up...

Brian A. Deck -- President and Chief Executive Officer

Sure. Yes. And as that $4 million included both M&A and restructuring costs. So it's kind of about half and half is to complete some of the restructuring efforts from the end of last year. But we think of a really well developed and the new strategy and the pipeline is pretty broad in terms of -- the way I think of it, Larry is there are some decent size equipment opportunities that we, from a proprietary perspective, we continue to cultivate over the last several years. And just trying to stay close to the owner-operators and we're willing to guide -- we do like going both directions. In terms of going to the right into packaging, potentially into more of that, I will call it secondary processing and even dipping a little bit into the primary processing for things that are adjacent to our offering on the secondary side, so that's from the equipment capabilities perspective. We're also interested in going into deeper -- we're pretty broad based as you know on our product offering, but there are some areas that we wouldn't mind going a little bit deeper into our penetration and the actual end consumer market categories that we talked about things like nutraceuticals and other areas of higher growth that we continue to look at and where we spend our money, we do a lot of research on these end markets and where we think these things are going. So we do spend a lot of time thinking about where we would like to deploy our capital and as part of that we develop a pretty broad funnel of opportunities. And then as we start to mature, we know precisely where they fit within that strategy for M&A and so that we're well ready to execute when they arise.

Lawrence De Maria -- William Blair -- Analyst

Okay, thanks. Very helpful. Good luck this year guys.

Brian A. Deck -- President and Chief Executive Officer

Thanks.

Operator

Your next question is from Michael McGinn with Wells Fargo. Your line is open.

Michael McGinn -- Wells Fargo -- Analyst

Hey, good morning everybody.

Brian A. Deck -- President and Chief Executive Officer

Hi, Mike.

Michael McGinn -- Wells Fargo -- Analyst

I just wanted to go back to the change in FoodTech. I'm doing some quick back of the envelope math here, and it looks like revenue relative to the old guidance coming up $50 million. We're really going like a $4 million or $5 million profit pull through and you were to square that up with your margin rate, what you were projecting before it looks like $3 million inflation hit that you're under absorbing this year. Is that kind of the way you're looking at it and do you think that's peaked or how would you frame your current guidance there?

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Yes, Mike, this is Matt. I think your numbers are pretty close in terms of sort of what we're seeing on the inflation side. I think normally we would expect to see flow-through on the incremental sales in the high 20% to low 30%, but just given some of the inflationary pressures we've seen intensify over the last few months as well as some of the -- just inefficiencies that we're experiencing with the supply constraints and logistics constraints. That's actually putting a lot of pressure on our cost on the manufacturing floor. So I think I would say the pressure is probably about 25 to 50 basis points that we're seeing off of our normal flow through on the incremental sales.

Michael McGinn -- Wells Fargo -- Analyst

Got it. I appreciate it. And then maybe just on the good growth, and you need to fund that with the balance sheet. Was that in more of an inventory point or more of the receivables that you have had good collection this quarter. Can you walk me through the puts and takes on your free cash flow for this year?

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Sure. In the first quarter, the strong performance on cash flow is really driven by collections on receivables and then the -- actually the timing and collections on the deposits associated with the orders that we received in the quarter. So that's really what the upside was in the first quarter. We didn't really see a significant investment yet in inventory in the first quarter, a little bit on the FoodTech side, but that was offset slightly with AeroTech's inventory being down, but as we get into the second quarter, we do expect to see an investment in inventory to support sales growth, not only on the FoodTech side that's coming through in the orders, but also in the back half of the year, we had expectations for the AeroTech business to grow and we need to invest in some long lead-time inventory items in the second quarter.

Brian A. Deck -- President and Chief Executive Officer

Right and then I'd add that obviously with the revenue growth in the back half of the year, we would expect receivables to grow in the back half of the year, too.

Michael McGinn -- Wells Fargo -- Analyst

Okay. So this is a situation where, if you saw the right deal kind of similar to the auto coding deal, you think you can fund this internally or do you foresee yourself dipping back into the debt mark, I'm just trying to get a feel for leverage also in the back half of this year.

Brian A. Deck -- President and Chief Executive Officer

Well it's certainly, I'll let Matt speak to the capital structure. But with that -- we have $1 billion credit facility with less than $500 million of usage right now, so lots of capacity there.

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Yes, I would say, just to add to that, like Brian said, we have plenty of capacity in our current capital structure to support some of the smaller bolt-on deals that you've seen us do in the past. I think if there was a larger deal or there was more urgency with a number of deals lined up, we would evaluate options in the capital markets and we're currently just looking at that more closely, just as a capital markets are very supportive of new transactions. But right now, they're just not in urgent need. And so we're going to continue to evaluate that and wait and see if there is a new need for us to go out with the capital markets.

Michael McGinn -- Wells Fargo -- Analyst

All right. Got it. Good quarter, guys. Thanks for the time.

Brian A. Deck -- President and Chief Executive Officer

Thank you.

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Your next question is from Joel Tiss with BMO. Your line is open.

Joel Tiss -- BMO Capital Markets -- Analyst

Hey guys. How is it going?

Brian A. Deck -- President and Chief Executive Officer

Hey Joe.

Joel Tiss -- BMO Capital Markets -- Analyst

I just wonder can we talk about aero a little bit and when prices reset there? Is that a kind of a once a year. And any color on what you're hearing from your customers. It seems like it would be more of a 2022 and '23 kind of recovery, but just any color you got there. Thank you.

Brian A. Deck -- President and Chief Executive Officer

Sure. Yes, Joe, it depends on the customer. Some of the larger more sophisticated customers that we have, they tend to have annual pricing agreements, and that's work, I'll call it, the more stable contract type business that we do with them. And that applies on the Jet Bridge side, the passenger boarding bridge side as well. Those are locked in contracts over the next year or two, but what we do on that side as we tend to lock-in the metals prices as the end of those contracts. So it's more of a pressure on the ground support side, the GSE side and again that's a mix of customers, larger ones that do annual contracts, but then I would say the business that kind of comes and goes more frequently less contractual or less under contract basis. We have a little bit more pricing authority in that, but that's really based upon market conditions and what we see from competition. So it's a little bit more fluid on that fact. But certainly, as we are entering the 2022, we'll have a better opportunity to assess where we are.

Joel Tiss -- BMO Capital Markets -- Analyst

Okay and then just a quick one. On the backlog, rising 24% on the 22% order increase, is that inability to get anything out the door. Or it's just sort of a natural seasonal flow of the business?

Brian A. Deck -- President and Chief Executive Officer

It's generally natural seasonal flow of the business. I would say so we would have expected that kind of this time of the year. Anyhow. That said, our vendor lead times are extending between logistics challenges, etc. So we're starting to see our lead times as well as our competitor's lead times start to creep up a little bit, especially as we try to make be pragmatic about when the parts are coming in and the reality it does have, but it's a reflection of the robust nature of the commercial environment that we're seeing is backgrounds will probably continue to creep up a little bit over the rest of the year.

Joel Tiss -- BMO Capital Markets -- Analyst

All right. That's great. Thank you.

Brian A. Deck -- President and Chief Executive Officer

Thank you.

Operator

Our next question is from Mig Dobre with Baird. Your line is open.

Brian A. Deck -- President and Chief Executive Officer

Good morning, Mig.

Mig Dobre -- Baird -- Analyst

Thanks, good morning Brian and Matt. I and wanted to maybe follow up here on Joe's question as far as backlog goes. I'm just trying to get a better grasp for how you're thinking about the cadence for the year in FoodTech here, right? I mean, just based on your comments for Q2, we're running revenue at call it $310 million, $320 million per quarter in the first half. Then the guidance implies you're getting up to on average about $360 million plus in the back half of the year. So I'm sort of trying to understand if that's a factor of kind of how you're seeing customer deliveries and customer preference in terms of the timing of how you're delivering out of the backlog or is there is an implication here that the supply chain constraints that sort of impact your near-term get resolved that as the year progresses. And you can actually convert on a backlog and start to realize those revenues?

Brian A. Deck -- President and Chief Executive Officer

Right, and to be clear, we did increase our revenue guidance from FoodTech which was 3.12 in Q1 to 3.25 to 3.40, so there is a more of a gradual ramp-up, I would say the vast majority Mig is based on customer demand and backlog intended deliveries. We are trying to be pragmatic in understanding a little bit of the pressures as I just mentioned in terms of being able to make sure we deliver on those backlog requirements and customer requirements, but the vast majority of the cadence of the revenue is based on our customer demand with some consideration for the supply chain environment that we're working under.

Mig Dobre -- Baird -- Analyst

I see. So it's not as if the supply chain is the only determinant on the revenue did that. Okay, I get that part. Then I guess my question is on the margin structure right. I mean you're guiding Q2 margins down year-over-year, but down relative to 2019 as well in FoodTech but the back half of the year we're seeing improvement right? We're seeing improvement year-over-year. We're seeing improvement relative to 2019. So I guess I'm sort of curious again how you're thinking about these costs for essentially what is it that gets better in the back half relative to the second quarter?

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Hi Mig, this is Matt. I think what we're seeing in the second quarter is just the timing of our ability to be able to offset some of the inflation that we're seeing with higher prices as well as with some of the sourcing actions that the team is taking. I think our confidence and our ability to adjust prices in the second half as well as the sourcing team being able to either find additional sources of supply and maybe better prices will help us expand the margins in the second half of the year.

Mig Dobre -- Baird -- Analyst

How much of this would you say is within your control and you have visibility on it today versus things that are kind of on the come in terms of being able to deliver on your margin guide?

Brian A. Deck -- President and Chief Executive Officer

I would fear the inflation side. We have truly good visibility, because we are getting -- we know what's on order. We've got the strong backlog, obviously. So we got a pretty sophisticated sourcing group that looks very specifically and they can identify by category, by area, where we've got -- where we have exposure on the metal side or otherwise. And it's really good visibility to our commercial folks and our operations folks as to how to address those issues. So I would say that is we have more visibility on. The supply chain constraints, particularly in the second quarter, those are little bit harder to predict because when does the shipping lanes open up a little [Indecipherable], I'm literally seeing about three week delays on logistics, generally, compared to what we otherwise would want to be. So that one is a little bit less visible Mig. But we think we've got a pretty good handle on it in terms of what it could result in and we have tried to consider that in the guidance itself.

And then just as a reminder, COVID still is a frustrating a little bit in Australia and some other in India and other -- some of the other Asian countries, but also in Europe too, particularly, Spain, Italy, and a couple of other places, so that we try to consider that as well because that actually adds to logistics costs or travel costs, depending -- the quarantine etc. So we really have tried to consider all these things appropriately. We think we got a handle on it and it will create some pressure, which is why there's that flow through that Matt talked about through the remainder of the year but, yes, despite all that made, wondering pretty good margin and margin growth year-over-year and we're really pleased about that in delivering margin growth in a really tough environment, inflationary environment, supply chain challenge environment and delivering 9% to 11% growth on the FoodTech side overall.

So it's -- and by the way, I mean the gold contained in hand with the supply chain challenges, obviously, the industrial world is real peak in demand is putting pressure on the supply chain, they little bit go hand in hand and if I had a choice of volume and better cost, higher volume and higher costs, I will take that all day along.

Mig Dobre -- Baird -- Analyst

Yes, I would agree with that comment Brian. I guess, what surprises me a little bit right is that in Q1, your margins were better than Q1 '19. In Q3 and Q4 your margins are implied to be better than Q3 and Q4 '19. It's only in Q2 that we seem to have a problem with and the recent theory, you would have had some level of visibility, we all know that costs were going out that freight was going on. So something seems to be special about Q2 in terms of being worse than any other period in the year. And I'm just trying to get a sense what that is? Why is it that Q2 is so problematic. And I think to some degree you've explained.

Brian A. Deck -- President and Chief Executive Officer

Mig, I would tell you the quick move in the logistics in particular with the Suez Canal and some of the real recent supply chain constraints, are trying to reflect that properly, and then we're able to recover as the back half of the year concludes.

Mig Dobre -- Baird -- Analyst

Okay, then my final question on AeroTech. If -- you definitely sound more confident than you were in the past as far as the demand trajectory in this business, but if I'm just looking at order intake. Order intake is actually worse in Q1 than what you've seen in the back half of 2020 and arguably speaking COVID has gotten better not worse during Q1. So I guess, I'm wondering what are you hearing from customers that might have diverged from just a pure order intake to give you this confidence. And as you look at your full year guidance, do you expect orders to be able to sort of keep up with the revenues, right. So do you expect sort of book-to-bill to approximate 1 or are we essentially factoring in significant backlog burn as the year progresses in order to deliver your revenue guide? Thank you.

Brian A. Deck -- President and Chief Executive Officer

Right. So in this -- the reason why I feel confident on the orders, we're about $100 million in orders. What was interesting and which I like what happened in the first quarter, was that we saw an improvement in the ground support order activity on the deicers on the cargo loaders in particular, and as you know a little bit lower orders and the Jet Bridge business, which tends to be quite lumpy. So we see that -- the fact that the GST side is improving is a really great sign to us. And we know we have a really great visibility in the passenger boarding bridge side and it can be lumpy from one quarter to another quarter. So I'd certainly expect improvement in the second quarter order structure and generally speaking, I do expect orders to keep pace for the remainder of the year with revenue [Phonetic].

Mig Dobre -- Baird -- Analyst

Okay, thank you.

Brian A. Deck -- President and Chief Executive Officer

Sure.

Operator

[Operator Instructions] Our next question is from Andrew Obin with Bank of America. Your line is open.

Emily Shu -- Bank of America -- Analyst

Hi, good morning. This is Emily Shu on for Andrew Obin. Just the 25 basis points to 50 basis point headwind to incrementals this year from inflation and supply chain. Is that net of pricing? And are you expecting pricing to offset or more than offset inflation this year and also just curious how will net pricing play out quarter-to-quarter between the two segments? Thank you.

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Hi, Emily, it's Matt. Yes, I think in terms of your question about, is it net of -- is inflation net of pricing? I'd say yes. We are including pricing in that guidance. And then how it plays out through the quarter? On the AeroTech side, I think, as Brian earlier mentioned, it's a little harder for the AeroTech business to be able to raise prices in the short-term. A lot of their projects have been -- have a longer quote in closure cycle and those prices are somewhat built in as well as just the competitive landscape on the Mobile Equipment business just makes price increases in the short-term a little bit more difficult for that business. I think on the FoodTech side we are able to increase prices a little bit more, with a little bit more flexibility and we should see prices increase over the next few quarters as we adjust for this inflationary environment that we're seeing.

Emily Shu -- Bank of America -- Analyst

Okay, great. And then just a quick follow-up. I'm curious, what are you guys seeing on the labor side. We've heard from a lot of companies so far that you know in addition to inflation and supply chain bottlenecks, shortage of labor has been a headwind. So I'm just curious what you guys are seeing on the labor side? Thank you.

Brian A. Deck -- President and Chief Executive Officer

Labor is tight right now. It depends -- it's, state-by-state, honestly, but some of the federal government incentives didn't help that situation. So it's tied in. It does, obviously incrementally put a little bit of pressure on costs. We do a pretty good job. But yes, it's a tight labor market for sure. Both on -- I would say the direct labor side as well, again, more in the US, less in Europe, but also on the professional side that we see engineering and the commercial side and management, it's a tight labor market and we try to account for some of the incentive compensation that we need to address some of those things and that's also reflected in our guidance.

Operator

We have no further questions at this time. I'll turn the call over to Mr. Brian Deck for closing remarks.

Brian A. Deck -- President and Chief Executive Officer

Great, thank you everybody for joining us today and if you have any questions, please feel free to reach out to Megan Rattigan. Have a nice day.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Megan Rattigan -- Vice President, Investor Relations and Controller

Brian A. Deck -- President and Chief Executive Officer

Matthew J. Meister -- Executive Vice President and Chief Financial Officer

Walter Liptak -- Seaport Global -- Analyst

Lawrence De Maria -- William Blair -- Analyst

Michael McGinn -- Wells Fargo -- Analyst

Joel Tiss -- BMO Capital Markets -- Analyst

Mig Dobre -- Baird -- Analyst

Emily Shu -- Bank of America -- Analyst

More JBT analysis

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