John Bean Technologies Corp (JBT) Q2 2021 Earnings Call Transcript

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John Bean Technologies Corp (JBT 2.23%)
Q2 2021 Earnings Call
Jul 28, 2021, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to JBT Corporation Second Quarter 2021 Earnings Conference Call. My name is Vick and I will be your conference operator today. [Operator Instructions]

I will now turn the call over to JBT's Vice President of Corporate Development and Investor Relations, Kedric Meredith to begin today's conference.

Kedric Meredith -- Vice President of Corporate Development and Investor Relations

Thank you, Vick. Good morning, everyone and welcome to our second quarter 2021 conference call. With me on the call is our Chief Executive Officer, Brian Deck; and our 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 filings. 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 Investor Relations section of our website.

Finally, I encourage you to review the second quarter slide deck, which is also posted in the Investor Relations section of the JBT website. In it, we show historical trends, our key performance metrics and business opportunities and speak to our growth strategy.

Now I will turn the call over to Brian.

Brian A. Deck -- President and Chief Executive Officer

Thanks, Kedric and good morning, everyone. It's great to be here to talk about JBT's strong financial performance and the strategic progress we made in the second quarter. As we highlighted last quarter, JBT continues to enjoy robust demand at FoodTech and encouraging signs of recovery at AeroTech. At the same time, we continue to face a challenging macro environment driving increase in cost of doing the business including material cost inflation, supply chain constraints and tight logistics. Those pressures have intensified and now also include rising labor costs and labor shortages.

Notwithstanding this challenging backdrop, we outperformed expectations on the top and bottom lines in the second quarter. I'd like to express my appreciation to everyone at JBT who did an excellent job of getting orders out the door to satisfy customer needs in this tough operating environment. And a specific thank you to our service technicians who have gone above and beyond to meet customer expectations despite the complexities and restrictions associated with the pandemic.

In the second quarter, we also booked record orders and generated excellent cash flow. Moreover, we advanced our growth strategy with the exciting acquisition of Prevenio which expands our recurring revenue stream and further strengthens JBT's wall in food safety.

I'll hand it over to Matt who will provide a more detailed analysis of the second quarter results, speak to the benefits of the convertible note offering we completed in the quarter and walk you through our updated guidance.

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

Thanks, Brian. JBT's second quarter performance continued to demonstrate our ability to deliver on growth in a challenging operating environment. FoodTech revenue was $361 million, an increase of 19% year-over-year and 16% sequentially. As Brian mentioned, we outperformed in the quarter driven primarily by better than expected shipments as our businesses executed well despite the challenges they faced.

The impact of foreign exchange translation was also a positive factor in the quarter, accounting for approximately 5 percentage points of the year-over-year growth which was 3 percentage points higher than expected. Adjusted EBITDA margin for the quarter was 19%, operating margins of 14.3% at the low end of our guidance range and negatively impacted by the cost pressures we experienced with the supply chain and labor market.

AeroTech revenue of $115 million which was ahead 6% year-over-year and 8% sequentially was at the high end of our expectations. Adjusted EBITDA margins of 11.1% and operating margins of 10.5% exceeded guidance due to a favorable mix of higher recurring revenue. Interest expense came in nearly $1 million less than forecast due to better than expected cash flow. As a result, JBT reported diluted earnings per share from continuing operations of $0.95 in the second quarter. Adjusted EPS of $1.19 includes an adjustment for a $4.4 million or $0.14 per share non-cash deferred tax remeasurement associated with the tax law change in the UK.

Adjusted EBITDA for the second quarter was $70.1 million up 2.58% year-over-year and 20% sequentially. Operating profit of $47.3 million declined 1% year-over-year and higher M&A costs also had [Phonetic] 25% sequentially. Free cash flow for the quarter remained strong at $35 million, representing a conversion rate of 115% with continued goods collections and accounts receivable, customer deposits and a slower than expected investment in inventory due to supply chain constraints.

Going forward, we need to invest in inventory levels to support the increased backlog. And therefore, with higher forecasted revenue, we anticipate that the balance sheet will expand in the second half of the year. Additionally, we are increasing our capital expenditure forecast for the year by approximately $5 million from our previous guidance to support further strategic investment in our digital capabilities. Altogether, we expect free cash flow conversion for the year to remain north of 100%.

As we look ahead to the full year of 2021, we have refined our guidance based on first half results and order trends. We have again raised top line guidance for FoodTech, forecasting a year-over-year gain of 10% to 12% organically with another 2% increase related to FX translation, that compares with our previous guidance of 9% to 11%. With the inclusion of Prevenio acquisition, our all-in top line guidance for FoodTech is 14% to 16% growth in the full year. Considering the continuing supply chain and operational cost pressures, we have updated the margin guidance range for FoodTech with projected operating margins of 14% to 14.75% and adjusted EBITDA margin of 19% to 19.75%.

At AeroTech, we have narrowed our revenue guidance range to 1% to 4% from the previously communicated range of 0% to 5%. We are holding margin guidance with projected operating margins of 10.75% to 11.25% and adjusted EBITDA margins of 12% to 12.5%. Additionally, we are adjusting our forecast for corporate costs as a percent of sales down slightly to 2.7% and lowering interest expense guidance to $9 million to $10 million.

Altogether, we have raised our adjusted EPS guidance to $4.60 to $4.80 which excludes M&A and restructuring costs of $12 million to $14 million and the previously mentioned UK tax remeasurement in the second quarter. Our GAAP EPS guidance of $4.15 to $4.35 is $0.05 below our previous guidance and primarily due to higher M&A related costs. We've also raised our full year adjusted EBITDA guidance to $280 million to $290 million up from the previous guidance of $270 million to $285 million.

Now focusing on the third quarter, we expect revenue growth for JBT of 18% to 19%. This consists of year-over-year growth of 19% to 20% at FoodTech, which includes 3% to 4% from acquisitions. For the AeroTech business, we are projecting growth of 15% to 16% for the quarter. At FoodTech, we are projecting third quarter operating margin of 14% to 14.5% with adjusted EBITDA margins of 19% to 19.5%.

For AeroTech, operating margins are forecasted in 11.25% to 11.75% with adjusted EBITDA margin of 12.25% to 12.75%. Corporate costs for the quarter are expected to be $13 million to $14 million, excluding approximately $4 million in M&A and restructuring costs. Interest expense should be $2.5 million to $3 million. That brings third quarter 2021 earnings per share guidance to $1 to $1.10 on a GAAP basis and $1.10 to $1.20 as adjusted.

Finally, I would like to briefly touch on the convertible note offering that we completed in the second quarter. With net proceeds of more than $350 million, we have locked in a portion of JBT's capital at a historically low fixed interest rate with favorable conversion terms that limit shareholder dilution until the stock exceeds the synthetic strike price of $240 per share. The notes also afford JBT's additional flexibility in our capital structure to support our organic investments and acquisition strategy.

With that, let me turn the call back to Brian.

Brian A. Deck -- President and Chief Executive Officer

Thanks, Matt. As I mentioned at the top of the call, JBT generated record orders in the second quarter. FoodTech orders expanded 3% sequentially from the first quarter's record level. We continue to enjoy robust demand from customers serving the retail market with improvements on the foodservice side with particular strength in poultry, plant-based foods, pet foods, fresh produce and packaged ready meals. In addition, our automated guided vehicle business outperformed in the second quarter with several large food customer orders, a reflection of the growing demand for back-end automation among our customer base.

FoodTech's robust order trends are also a direct reflection of the continued investment we've made in product innovation. JBT's recent product launches featuring advances of hygiene, capacity and automation have gained nice acceptance in the marketplace. Furthermore, new features that reduce food waste and promote more efficient use of water and energy enabled JBT to help our customers on their sustainability journey.

Geographically, FoodTech commercial activity in North America remained robust. Europe was essentially flat versus a volatile first quarter, but with progress on vaccine penetration and governmental economic support, its outlook seems to be more promising albeit subject to uncertainty surrounding COVID. As it relates to Asia and South America, we are experiencing some fresh pandemic-related delays in customer investment decision making.

AeroTech also enjoyed record orders in the second quarter. This primarily reflected some major orders on the infrastructure side of the business, which will mostly ship in 2022. AeroTech's second quarter orders also reflected typical seasonal strength including demand for cargo loaders and deicers. Given the lumpiness of orders, we expect AeroTech order activity in the second half of the year to be normal -- to be more normalized relative to the outstanding second quarter.

At the same time, we are encouraged by the pickup in US passenger traffic and have a few -- have secured a few additional orders from commercial airlines. However, as we've said, we expect full recovery to take another two years to play out and we're cautiously watching the developments surrounding the Delta variant, which also could impact the pace of recovery in air travel. Nonetheless, we feel we are clearly beyond the bottom of the investment cycle.

Now to the acquisition of Prevenio which closed in early July. Prevenio further strengthens JBT's role in food safety, which is a critical and growing concern for our food processing customers. They offer a unique delivery system for consumption-driven anti-microbial solutions which provide optimal food safety performance on our customers' operations, a safer environment for their employees as well as enhances food integrity.

Financially, Prevenio has demonstrated an impressive growth record with EBITDA margins in the mid-20s. Moreover, the revenue model is predominantly consumable and contractual adding to the strength of our recurring revenue profile. And as part of JBT, we foresee significant opportunities to expand Prevenio's applications beyond its core poultry market and its other proteins and fresh food and vegetables where JBT has a strong presence. Furthermore, over time, we see opportunities to extend its geographic reach.

Switching gears toward internal investments, JBT plans to accelerate investment in our digital strategy in iOPS platform that builds intelligence in our products and services. Through a focus on digitally enabled customer-centric solutions, we believe we can further entrench JBT as a holistic uptime solutions provider with our customers.

Additionally, I want to speak to the rebranding of what was previously our liquid food business within the FoodTech segment. Its new name Diversified Food & Health reflects a business that has expanded far beyond its historical focus on juice and canned goods as a result of continued investment, both organically and through acquisition. Diversified Food & Health now provides a wide portfolio of solutions for customers across the FoodTech segment including processing, preservation and packaging solutions to serve end markets for fresh cut and processed foods and vegetables, convenience foods, prepared and ready to eat meals, pet foods, protein and plant-based beverages, dairy, pharmaceuticals and nutraceuticals. Together with our protein business, FoodTech has an enviable diverse offering for our food and beverage customers.

Overall, we are very pleased with the robust commercial activity at FoodTech, which has enjoyed broad-based strength on the retail side growing demand for automation solutions and a pickup in the hard hit foodservice side.

At AeroTech, continued strength on the infrastructure side has been accompanied by initial improvement in our business with commercial airlines. However, we remain concerned by the recent resurgence in COVID and the potential impact of macroeconomic conditions. We are otherwise mindful of the high cost environment under which we are working.

Lastly, as part of JBT's core values, we continue to prioritize a diverse and inclusive work culture that promotes continued education, enhance development opportunities, mutual respect and teamwork. I want to extend my sincere thanks to the entire JBT team who have embraced our core values, which enables us to serve our customers and meet their needs for essential solutions.

With that, I'll take your questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Lawrence De Maria from William Blair. Your line is open.

Lawrence De Maria -- William Blair -- Analyst

Thanks. Good morning, everybody.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Lawrence De Maria -- William Blair -- Analyst

I want to talk about the orders and backlog. I think you noted that some of the FoodTech was -- I'm sorry, AeroTech was for next year. But can you just talk broadly about the new orders backlog and the conversion time? What it means ultimately for the first half of '22 which seems like more important in the second half of '21 given the timing of the orders. And if supply chains ease up, does that imply that the orders for next year can flip into '21 or are we specifically seeing orders that are pushed out into '22 that would obviously give us some more confidence into the growth trajectory for next year?

Brian A. Deck -- President and Chief Executive Officer

Right. Thanks, Larry. So, as you know, we do have a broad range of lead times that are weighed [Phonetic] to our product offerings anywhere from six to eight weeks up to nine months and even a year. I would tell you that the strength of the orders in FoodTech for the quarter, and little bit will go into the fourth quarter, but quite a bit will be going into 2022 given the size and nature of the projects that we're looking at. Particularly, I mentioned the AGV side and some large orders on the Diversified Food & Health side which will help -- have a much larger backlog at the end of this year versus where we were at the end of 2020. So, we are setting ourselves up for a decent first half of 2022.

And similarly on the AeroTech side as I mentioned, those infrastructure-related projects, almost all of that will go into 2022 and we are seeing improvement on the commercial airlines and generally speaking on the ground support side. So, we would also expect a larger backlog ending 2021 in AeroTech as well.

Lawrence De Maria -- William Blair -- Analyst

Okay. That's very helpful. Thanks, Brian. And then the second part, maybe just talk about price. I know there's a lot of inflation out there obviously. And historically, I think there's more risk on price cost on AeroTech, but can you just talk about how you're protecting yourselves on these orders into next year that would mature obviously margin expansion or -- and just what kind of risk areas in the backlog on pricing and margin?

Brian A. Deck -- President and Chief Executive Officer

Yeah. So I'll specifically talk to FoodTech first. So, as you know, FoodTech is largely project-based, and obviously, also about almost half of our revenue is based on recurring revenue aftermarket etc. So, generally speaking, we have a good ability to factor in product inflation into our price. So, the price cost and the product inflation, it's fairly well covered, especially when you consider the strength of our supply chain team. As you know, Larry, we've put a lot of resources behind the supply chain over the last two years and those investments have really proven to pay dividends, especially in this time. While we're not seeing enough with that, we otherwise would have gotten absent inflation. It is really significantly helping cool the line.

So, we're generally being able to price for inflationary items and materials. The challenge comes more so on the logistics side, as you may know, things like ocean freight have more than tripled almost quadrupled versus this time a year ago. So, that is why we do see some pressure on the margins in the back half of the year for FoodTech and try to appropriately adjust our guidance accordingly. But generally speaking, FoodTech is in pretty good shape. It was adding to north of 19% margins for the year, and given the environment they are in, that's pretty flat versus where we were in 2019. So, we're really pleased in our ability to price cost and just manage the cost in general just a little bit of pressure here in the back half.

On the AeroTech side, you are correct that it is a little bit tougher given the nature of the products and services. On the infrastructure side, that was our project based. We do a pretty good job of factoring our current cost and outlook for the metals environment as we price those was tend to be longer-term contracts as you know are going to go well into 2022. So, we will be seeing metal hedging on that. And historically, we've done some metal hedging on the products, but it's not 100% so there is -- holds a little bit of risk there, but in the current environment with metals at pretty high levels, we would be very hopeful that things don't get worse as we go into 2022. If there is any abatement on the metals prices, there actually could be a little bit of upside.

On the ground support equipment, it is a tougher environment from a competition perspective. So, price cost is more reflective of the market itself as opposed to material costs. You can see some of that pressure over the last couple of quarters but -- so, if we happen to outperform a little bit based on some of the mix and our margins.

In the back half of the year, we do see some sort further pressure versus what we would normally see in terms of our flow-through on EBITDA given the high volume in the back half of the year. So, we have tried to properly account for that in the back half of the year, given that price cost pressure. But I don't know if you take a step back and look at the margin profile for JBT for both Food and AeroTech, given the conditions we're in, we're really pleased with our current situation. We're holding margins for the most part versus where we were in 2019.

And if you look at FoodTech in general, if you exclude -- even if you exclude the impact of acquisitions, overall, FoodTech is looking to outperform 2019, not by a large margin but the rebound is there, both on the margin side and on the revenue side.

Lawrence De Maria -- William Blair -- Analyst

Okay. Thanks a lot, Brian. Appreciate all the color. Good luck.

Brian A. Deck -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Mig Dobre from Robert W. Baird & Company. Your line is open.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Thank you. Good morning, gentlemen.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Just to sort of follow up on this margin discussion. I guess I'm trying to get a better sense for you in terms of -- from you in terms of what's incremental relative to your prior outlook. At least to me, it sounds like maybe things have gotten more challenging on the labor front than what you had envisioned in the past. And I'm also sort of trying to get a sense from you in terms of the various ranges that you provided for each segment but it's really FoodTech that I'm most interested in on the margin side. I mean what takes you to the top end versus the bottom end of your margin guidance at this point?

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

Hi, Mig. It's Matt. I'll try to answer the best I can. I think as you mentioned, we did see the inflation on labor accelerate in Q2, and we try to take that into our guidance, which is putting pressure in the second half as well as Brian mentioned, the inflation on logistics costs that are also in our guidance. As Brian mentioned, we are fairly well set up to address material inflation through pricing on the FoodTech side, but there could be some lag there as material costs continue to get worse in the second half of the year.

Additionally, on the FoodTech side, there has been a lot of inefficiency on the operation side, as we've had really difficult issues with vendor -- reliability of vendor supply and delivery, and that forced the business to be relatively inefficient sometimes on the operating floor, do the pickup and set down different various piece of equipment to deliver to the customer.

So, we tried to build all that into our guidance and that's what putting some of the pressure in the back half on the margins. What would potentially get us to the top end would be our ability to choose -- offset some of that inflation by our supply chain team as well as a favorable mix on the aftermarket side. If that continues to get better, we could see higher margins in the back half, if we see a higher mix of aftermarket and recurring revenue.

Brian A. Deck -- President and Chief Executive Officer

Right. And I'll also add, if logistics prices come down, that would help a lot as well as if supply chains do ease up, we would get better productivity out of the factories. So, that would help as well. So, we did try to factor that in the range of outlook that we see.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Okay. And when we're talking about mix at FoodTech recurring versus non-recurring, the recurring portion of the business has done quite well throughout the COVID downturn, it's become a bigger portion of the pipe. I'm sort of curious as to how you're thinking on a go-forward basis. I'm presuming that the rebound in orders that we're seeing is a resulting growth for the non-recurring portion of the business. If that's the case, do we -- should we expect negative margin mix as the non-recurring portion of the business is rebounding? Or is that not a factor as we think about 2022 for instance.

Brian A. Deck -- President and Chief Executive Officer

Sure. It is a factor and we -- as you may recall on the last call, I think we were close to 50% aftermarket -- recurring net revenue mix last year given the lower equipment sales and we guided that it will be reverting to more of about 45%, 55% mix -- 45%, recurring; 55%, equipment in 2021. And we are generally on that pace, actually slightly ahead on the aftermarket, but generally that is a -- when you think about our progressions in 2020 to 2021, that is a negative factor and again considered in the mix and the margins.

As we roll into 2022, that's a little early to know the precise mix, but I wouldn't see it diverting significantly from the mix that we see in the current year. So I think the margin profile for 2022 is going to be more of a consideration of supply chain logistics and labor as opposed to a huge change from the mix versus 2021.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Okay. So, we're taking a hit this year basically on that.

Brian A. Deck -- President and Chief Executive Officer

Correct.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Then maybe the last question on this for me. Assuming that material cost don't accelerate yet again from here, do you think you're going to be fully caught up in terms of the pricing actions or the adjustments that you need to make exiting 2021? So, as we think about 2022, is it fair for us to think normal incremental margins for your business? And related to that, can you also remind us how you view normal incremental EBITDA margins -- incremental EBITDA margins given your evolving business mix? Thank you.

Brian A. Deck -- President and Chief Executive Officer

Sure. That's a pretty big assumption regarding the change in class from where we are today. But absent changes or moderation of inflation and other pressures on labor, etc., we would expect to be in a more normalized, incremental price flow-through, so to speak. And for FoodTech, that is typically somewhere in that 25% to 30% flow-through -- we call flow-through here. And on the AeroTech side, that's going to -- I would say, the swings from mix are potentially a little bit bigger but absence again, changes in mix or material cost inflation. They typically are in that 20% to 25% flow-through.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Thanks for the color. I'll jump back in the queue.

Operator

Your next question comes from the line of Michael McGinn from Wells Fargo Securities. Your line is open.

Michael McGinn -- Wells Fargo Securities -- Analyst

Hey, good morning, everybody. Thanks for the time.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Michael McGinn -- Wells Fargo Securities -- Analyst

Sorry if I missed this, but you mentioned the working capital ramp and the capex ramp through the back half of the year. I don't know if you gave dollars for that balance sheet for your net working capital side here [Phonetic] but that kind of shaken out like a -- I don't know, I guess -- your $30 million per quarter free cash flow for the back half, is that kind of what you guys are thinking.

Brian A. Deck -- President and Chief Executive Officer

Yeah. We did not give specific guidance on the number for free cash flow in the back half. Again, we just expected to be positive above 100% of net income for the second half of the year as the balance sheet grows with higher inventory and higher revenue, leading to higher accounts receivable.

So, I think, like you said the balance sheet will expand. To give you the exact numbers is kind of difficult, but we would expect it again to be positive and favorable to the back half of the year. And the capex as I mentioned is $5 million increase over our prior guidance, so our capex expectations for the full year are about $45 million to $50 million.

Michael McGinn -- Wells Fargo Securities -- Analyst

Great. Very helpful. If I could switch gears to Prevenio. You mentioned the existing poultry market, and then as well as the fruits and vegetables. I mean, is this a situation where you -- I guess how -- what is the level of investments needed to make the efficacy -- or to take in the vegetable -- fruit and vegetable market versus the poultry market. How -- do you think it's already being adapted like it is in the poultry market? Just any context or color, that would be great.

Brian A. Deck -- President and Chief Executive Officer

Sure. Yeah. Thanks for the question. Prevenio is very exciting and particularly as it relates to our ability to provide resources. And generally speaking, when you think about acquisitions for JBT, this really fits nicely in our portfolio in terms of where we want to be going in terms of closer to the customers' operations and then finding businesses that one-third falls into the JBT portfolio, we bring resources to the table.

So, specific to the fresh fruits and vegetable side, there's not a ton of investment required. It's more about the market penetration, the commercial efforts, working with our food scientists in getting them and our customers comfortable with the solution that are provided versus their current use of solutions that will provide protection to the fruit and vegetable. So, it's really low, generally speaking, from a capex or inventory investment. It's really more about the human resources and the time working with our customers to develop that market.

Michael McGinn -- Wells Fargo Securities -- Analyst

Got it. Appreciate that.

Brian A. Deck -- President and Chief Executive Officer

Great. Thank you.

Operator

Your next question comes from the line of Joel Tiss from 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, hi.

Joel Tiss -- BMO Capital Markets -- Analyst

I wonder if you could give us a little sense on the build of the backlog. Is that -- what percent or how do you think about how much of that is from order strength and how much of it is from inability to get stuff out the door because of some of the constraints you were talking about?

Brian A. Deck -- President and Chief Executive Officer

Yeah, interesting question. So, I would tell you that the vast majority of the debt build in the backlog is from the order strength. Now, we are seeing some push out of lead times kind of -- it really -- again, it's going to go back to, I think with Larry's question, it is product line by product line in terms of what the lead times, how they have changed. But anywhere from one to two weeks, up to extra 30, 60 days is what we're seeing in the lead times. But overall, when you just do the math, it's predominantly, the order strength is leading to the build of the backlog.

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

And just to add to that, in some geographies where there are higher COVID outbreaks, there are some customers that are pushing delivery down a little bit too. So, we are seeing some customer impacts from the COVID outbreaks. And again, certain geographies where the infection rates or the vaccination rates are in high.

Brian A. Deck -- President and Chief Executive Officer

Right. So, in that case, it's not so much our lead times and it's more of the customers' ability to accept.

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

Right.

Joel Tiss -- BMO Capital Markets -- Analyst

And which is good, because that probably gives you some ability to see well into 2022. And then what do you need to do, like this is more of a strategic longer-term question, but what do you need to do to get the operating margins in AeroTech up into the mid-teens kind of range? Is that product mix, is it volume? Can you give us a sense there?

Brian A. Deck -- President and Chief Executive Officer

Yeah. I would tell you it's predominantly volume and some of the work. And I would tell you the -- getting a more normalized environment as it relates to raw material costs, etc. As I mentioned, the price cost on the ground support side is a little bit more dependent upon the market conditions as opposed to pure kind of cost plus. So, the two things I would say is the volume as well as the moderation of the inflationary pressures.

If you go back to our guidance pre-COVID for 2020, we were on pace for a mid-teens EBITDA margin. So, business model fully supports mid-teens margin, it's just getting the world move it back to normal. And as you know, on the ground support side with the commercial airlines, that's going to take a while. It is nice to see the commercial traffic, it's really strong domestically. We'd like to see some -- more of those international routes in the business, routes to get the airlines making more money and starting to make some investments. But typically the ground support side does trail from an investment perspective, airplanes, etc. So that's why we say will take a couple of years.

But if you think about the pace that we are on, it's -- in the infrastructure side, one thing that's probably really worth mentioning is, at one point last year, there was some concern on the infrastructure side which has a longer lead time. And I'll -- generally longer sales cycle that once the impact from COVID starts to get felt in 2021 on those projects, but there'd be some risk to 2022. We don't see that playing out.

We see continued strength on the infrastructure side as we did pre-COVID. The longer-term macros on that, which have been driving a lot of growth on infrastructure side remain the case and JBT is extraordinarily well positioned on the infrastructure side, particularly related to the boarding -- the passenger boarding bridges and the ancillaries that go along with that.

Joel Tiss -- BMO Capital Markets -- Analyst

Well, that's great. All right, thank you.

Brian A. Deck -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Walter Liptak from Seaport Global. Your line is open.

Walter Liptak -- Seaport Global -- Analyst

Hi. Good morning, everyone.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Walter Liptak -- Seaport Global -- Analyst

I wanted to do a follow-on with this AeroTech and the infrastructure. And maybe the way to think about it is, the order has really increased a lot from last quarter, up about $100 million -- or about $80 million. And I think in your comments, you had mentioned guided vehicles versus infrastructure. I wonder if you can talk about just sort of the mix in that orders that you saw during the quarter?

Brian A. Deck -- President and Chief Executive Officer

Right. So walk us through the reminder, AGV within FoodTech these days. We moved it back in most of 2016 or so, 2014. So, everything on the AeroTech orders do $182 million if I believe that's the number. That's all on the -- all on the infrastructure side, but the outside strength of that number is on the infrastructure side.

And then as I mentioned in the prepared remarks, a progression of -- and seasonal impact from deicers and cargo loaders. As you know, the cargo market is strong and we do have seasonal activity coming up. So, generally speaking, it's that combination. But the bulk of the outperformance is -- it was on the infrastructure side, which is the passenger boarding bridges department [Phonetic].

Walter Liptak -- Seaport Global -- Analyst

Okay, great. Okay. So in the -- in FoodTech, you had the AGV, within -- like a significant amount of orders that came in within FoodTech for the guided vehicles?

Brian A. Deck -- President and Chief Executive Officer

It was. It was a great quarter for AGV drove us. Again, if you go back to kind of what is a normalized kind of quarter for JBT, $340 million, $350 million a quarter of orders should be a normal number. And let's say, with Prevenio, it's more likely $350 million to $360 million. And we are over $400 million for the quarter. Yeah. It was doing the $406 [Phonetic] million or something like that?

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

$397 million [Phonetic].

Brian A. Deck -- President and Chief Executive Officer

$397 million, right. A decent amount of that outperformance was on the AGV side and which is actually pretty exciting when you think about it, because AGV is the definition of automation and we are seeing a lot of demand on automation throughout FoodTech, but the combination of the penetration at AGV is seeing into the food markets, there's lot of food distributors out there, that combination and they're working together with the traditional FoodTech businesses really paying dividends and we're such well positioned from a secular perspective where that market is going. So investments that we've made in AGV as well as the rest of FoodTech over the last year -- last several years is really paying off in terms of the acceptance in the marketplace.

Walter Liptak -- Seaport Global -- Analyst

Okay, great. So when you were talking about how this order being at -- you're above that $350 million to $360 million range of orders, the delta is the AGV, is that what you are saying?

Brian A. Deck -- President and Chief Executive Officer

A portion of that. Yeah. A portion of that. But Diversified Food & Health also outperformed in the quarter and some of their -- actually on some pet food projects that will be completed in 2022.

Walter Liptak -- Seaport Global -- Analyst

Okay. And then just a follow-up on the supply chain thing, so you are having problems getting some shipments out. I wonder how much revenue shifted from this the second into the -- second quarter into the second half?

Brian A. Deck -- President and Chief Executive Officer

Yeah, it's a good question. We actually -- I don't think anything really -- we did a really great job of getting stuff out the door, actually I would say better than we thought, which was actually part of the driver on why we outperformed our revenue in the quarter. So I would say there is not shifts going from the second quarter into the third quarter. If anything, we've outperformed and got things out the door a little bit faster, we basically hit the number we had hoped we would hit, but then we were mindful of the risk that we were facing in the quarter and we were able to overcome those risks.

Walter Liptak -- Seaport Global -- Analyst

Okay, great. Is there something -- and I apologize for all the questions, but is there some -- is there something to change going into the third quarter or the fourth quarter where you think there could be some slippage of orders, tight supply chains or you mentioned cargo ships, etc. Is there something that changed or is there a potential to meet your shipments on time?

Brian A. Deck -- President and Chief Executive Officer

Yeah. Well, there is few things. One, we are still faced with those challenges and they are increasing particularly on the labor side, that's probably the biggest difference between the second quarter and the third quarter are some of the supply chain challenges. Logistics, I think equally tight in the third quarter as the second quarter, but pricing is a little bit higher. Obviously, we consider this all in the guidance. So in terms of shipments, we've tried to factor that appropriately.

Also noting -- it's worth noting that the third quarter is typically a little bit lighter than the second quarter for a couple of reasons. One, in Europe, there is usually a fair amount of time off in vacations. You're kind of tend to take a month off there, so that usually is reflected in some of the orders, sorry, some of the shipments. Additionally, on the food and juice side within Diversified Food & Health, there is a seasonal aspect, because the orange juice extraction business that we have, so we've tried to factor that as well. So that's all factored into that guidance for the third quarter.

Walter Liptak -- Seaport Global -- Analyst

Okay, great. Okay. Thanks for the color.

Brian A. Deck -- President and Chief Executive Officer

Sure.

Operator

Your next question comes from the line of Stephen Tusa from J.P. Morgan. Your line is open.

Stephen Tusa -- J.P. Morgan -- Analyst

Hi, good morning.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Stephen Tusa -- J.P. Morgan -- Analyst

Can you maybe just talk about some of the supply issues in a little bit more detail on the food side? We all know kind of the electronic components shortages and maybe there is obviously some metal-related components. I mean, anything more specific on like stuff that's surprised you with regards to what you're having trouble getting maybe in the more kind of arcane side of the supply chain?

And then, secondly, are you seeing any signs at all of customers saying they would have placed an order unlike the fourth quarter or something, but they're kind of saying we'll just make that decision next year as inflation cools down?

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

On the supply chain side, I don't know that we've been surprised by anything in terms of the supply chain. We haven't been hit significantly with chip shortage that you're hearing about in the news. We've seen some constraints on general electronics and certainly just general metals are hard to come by and they are increasingly higher cost.

I think what we've been surprised by a little bit is the complexity and the difficulties in the logistics market that probably had hit us higher and it doesn't hit us directly sometimes, they also hit us indirectly as that impacts our suppliers, right. So they're having issues getting stuff into their factories, which then delayed them, which then delays them be able to supply us on time. So just being at the end of that supply chain just causes a lot more volatility for our ability to deliver on time.

Stephen Tusa -- J.P. Morgan -- Analyst

That makes lot of sense right.

Brian A. Deck -- President and Chief Executive Officer

Right. And then anecdotally, Steve, I haven't heard any circumstance where customers kind of folding up their hands and say, you know what, this is too sloppy right now, lead times are long, so I'm just going to wait it out till next year. As you know, the sales cycle on FoodTech tends to be very detailed, very involved. It can often take weeks to months to get through a quote to an order. So we just don't see that as usually a huge driver of complexity. If anything, folks are trying to, given the environment that they're working on the demand side, the strength of the demand side, we do see what -- that's what's really driving our pipeline which remained strong from here.

Stephen Tusa -- J.P. Morgan -- Analyst

Great. Thanks for the color.

Brian A. Deck -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Andrew Obin from Bank of America. Your line is open.

Emily Shu -- Bank of America -- Analyst

Hey, good morning. This is Emily Shu on for Andrew Obin.

Brian A. Deck -- President and Chief Executive Officer

Good morning.

Emily Shu -- Bank of America -- Analyst

I just had another question on pricing. So we've heard some sectors have price shipment, which mean effectively they can raise customer prices at the time of shipment, so I'm wondering if you guys do that or do you use more of a contract pricing structure where you have to [Technical Issues] honor pricing, contract pricing to that shipment? Thanks.

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

Sure. I'll try to take that one. On the aftermarket side, we have price lists and we try to publish those and update those as we need to incorporate inflation. On the equipment side, specifically in FoodTech, we base our pricing at the time of the quote and we have reduced the amount of time that quote is valid and we don't lock in pricing until we get everything agreed to with the customer around engineering and then we can lock in pricing, because we can start to lock in the cost from the vendors at that point in time.

Now there are opportunities where we can -- if the inflation is significantly higher than we expected at that time, we do have sort of break the glass clause in some of our contracts that allow us to adjust pricing after that point in time, but we try not to use that clause too often as it impacts our relationships with our customers.

Emily Shu -- Bank of America -- Analyst

Okay, great. That's very helpful. And then just my last question is, can you just talk about how channel inventories are on both the FoodTech and AeroTech side? Thanks.

Brian A. Deck -- President and Chief Executive Officer

I'm sorry, I missed the question.

Emily Shu -- Bank of America -- Analyst

Just any color on channel inventory?

Brian A. Deck -- President and Chief Executive Officer

Channel inventory. Yeah. Fortunately for JBT that's -- if you're talking from our factory to our end customer, that's not really so much of an issue, because we're selling direct like 95% of the time. So there really is no channel disruptions or a buildup or depletion of inventory. We're working almost exclusively acceptance in faraway places where we do use some third-party to help us out in accessing the markets that are predominantly, like 95% of our orders are direct.

Emily Shu -- Bank of America -- Analyst

Thanks, guys.

Brian A. Deck -- President and Chief Executive Officer

Thank you.

Operator

[Operator Instructions] Your next question comes from the line of Mig Dobre from Robert W. Baird & Company. Your line is open.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Hey. Thanks for taking the follow-up. Just one question -- yeah, just one question for me back on FoodTech. So a few weeks ago, we saw that the USDA announced $500 million of funding for expanding meat and poultry processing and they were talking about focusing on smaller players and trying to add competition to that market. I looked to that and that seems to be a pretty good thing for your business. But I'm kind of curious on your view on the matter. I'm curious how long with -- this kind of business with smaller players take to develop? Do you have [Technical Issues] access to that channel? And I'm also wondering, if you think there is a multiplier effect to this funding that's been provided by the USDA, I mean that's kind of how they're seeing it, I think private capital is going to come to add on top of what they're providing in terms of funding. So, how do you think this is going to impact demand or your business? And how long do you think it takes for this to materialize?

Brian A. Deck -- President and Chief Executive Officer

Sure. So, generally speaking, the good news is that JBT has really, really broad participation in the poultry market and in the protein market in general. As we noted in the past, it's very rare for even our larger customers to be more than 5% or 10% of our business in any one year, because obviously, some peaks and valleys within there. But generally speaking, we have really, really broad participation.

So, any governmental support is good for us. So we actually also see that on the infrastructure side, and the AeroTech with the most recent infrastructure bill that's being passed along. But going back to protein, so we would view this as a good factor. It -- as we talked about in the past, it does take a while for investments, especially greenfield ones to turn into orders. It is more on the expansion of an individual line etc., that can take less than six months. But generally speaking, I wouldn't expect that to impact orders for 2021, it would be more the benefit to 2022.

As to the multiplier effect, I don't know the answer to that. I'm not an economist. It's really hard for me to figure out what that means. Obviously, any kind of subsidization from government will typically bring other sources of capital, just at the highest level. So, you would hope and think that, but it's really hard for me sitting here today to know if that's going to specifically benefit JBT or not.

Mig Dobre -- Robert W. Baird & Company -- Analyst

Okay. Thank you.

Brian A. Deck -- President and Chief Executive Officer

Sure.

Operator

Presenters, there are no further question at this time. Let me turn the call over back to Mr. Brian Deck.

Brian A. Deck -- President and Chief Executive Officer

Great. Thank you all for joining us this morning. Kedric and Matt will be available if you have any follow-up questions. Have a good day.

Operator

[Operator Closing Remarks]

Duration: 53 minutes

Call participants:

Kedric Meredith -- Vice President of Corporate Development and Investor Relations

Brian A. Deck -- President and Chief Executive Officer

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

Lawrence De Maria -- William Blair -- Analyst

Mig Dobre -- Robert W. Baird & Company -- Analyst

Michael McGinn -- Wells Fargo Securities -- Analyst

Joel Tiss -- BMO Capital Markets -- Analyst

Walter Liptak -- Seaport Global -- Analyst

Stephen Tusa -- J.P. Morgan -- Analyst

Emily Shu -- Bank of America -- Analyst

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