JBT Marel Corporation (JBTM) Q3 2017 Earnings Report, Transcript and Summary

Good morning and welcome to JBT Corporation's Third Quarter 2017 Earnings Conference Call. My name is Emily and I will be your conference operator today. [Operator Instructions]. I will now turn the call over to JBT's Director of Investor Relations, Mr. Jeff Scipta to begin today’s conference.

Thank you, Emily. Good morning, everyone and welcome to our third quarter 2017 conference call. With me on the call are our Chairman, President and CEO, Tom Giacomini; and our Executive Vice President and CFO, Brian Deck. Before we begin, I would like to remind everyone the forward-looking statements in today's call 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 certain risk factors that may have an impact on our results. These documents are available on our Investor Relations 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 on our Investor Relations website. Now I would like to turn the call over to Tom.

Thanks, Jeff. We are pleased to be with you this morning to talk about an excellent quarter at JBT. In the period, we posted double-digit revenue earning gains, captured strong margin expansion and booked robust orders. We feel really good about how our business developed in the quarter and how it positions us for the remainder of 2017 and the year ahead. I will let Brian provide color on our third quarter performance and updated guidance for 2017. Brian.

Thanks Tom and good morning everyone. JBT posted across the board strength in the third quarter with double-digit growth in revenue, operating profit and orders at both FoodTech and AeroTech. Third quarter revenue growth of 20% was composed of 5% organic and 15% from acquisitions. On a segment basis, FoodTech posted revenue growth of 26% including 5% organic and 21% from acquisitions. AeroTech posted revenue growth of 11% including 8% organic. Third quarter total segment operating profit expanded 32% year-over-year with a 110 basis points increased in segment margins. This pick-up was a bit better than expected and bolsters confidence in delivering continued sequential margin improvement in the fourth quarter. At the FoodTech level, margins of 12.8% increased 80 basis points year-over-year and 160 basis points sequentially. This resulted from our elevate initiatives, good operating leverage and as expected better margin contribution from acquisitions. AeroTech posted record earnings and margins in the third quarter with 170 basis points year-over-year expansion in margins to 12.3% due to improved mix and solid operating leverage. Acquisitions contributed 52 million of revenue with operating margins of 7.6% in the quarter that’s up from 3% operating margins in the second quarter. This improvement reflects the pattern we expect as we work through the short-term acquisition related transaction costs, inventory step-up and integration costs. Corporate expense was 2.5% of revenues in the period. We expect an increase in Q4 and for the full-year remain on-track for corporate expense at a little under 3%. Overall, business conditions and demand remain healthy. Inbound orders were up 27% versus the third quarter of 2016. FoodTech and AeroTech orders were ahead 22% and 38% respectively. Backlog was ahead 23% over year-over-year to a record level. JBT’s third quarter adjusted EBITDA of 55 million represents a 42% year-over-year gain primarily driven by organic performance. We generated strong free cash flow in the quarter of 64 million higher due to 6.5 million pension contribution. On a year-to-date basis, our free cash flow conversion was 80% of net income from continuing operations. We still expect 90% free cash flow conversion for the year. JBT’s performance in the third quarter and continued robust order flow reinforces confidence in our full-year guidance. Looking to the full-year, based on the strength of recent order activity. We now expect revenue to be the top-end of our previously announced, we need 6% to 7% organic growth. Combined with acquisition revenue growth of above 13%, we are confident on delivering total top-line growth of 20%. Additionally, we have refined our earnings guidance with projected earnings per share of $3 to $3.10, compared with previous guidance of $2.95 at weekend. Before I turn it back to Tom, let me provide an update on the projected 2018 impact of FASB ASC 606. The new standard and revenue recognition that we mentioned last quarter. Overall, we believe that new standard were better reflect the manner in which we create value for our customers. It should reduce some of the quarterly variation. Although, we still expect revenue to be back half weighted. We do not anticipate the new revenue recognition guidelines will have a meaningful impact on future full-year results. As a reminder approximately one-third of our revenue will be affected by the changing standard. As for reporting, we have elected the modified retrospective method, which means when we report quarterly results in 2018. We will provide the financials based on the new standards, as well as under the old standards for comparability. With that, I will turn the call back to Tom.

Thanks, Brian. In 2017, we embarked on our Elevate strategy, JBT’s three-year plan to deliver annual revenue and earnings growth of 10% and 15% respectively and 2019 return on invested capital of 15%. Underlying the Elevate strategy is a set of specific initiatives, a key Elevate initiative is to continue growing our recurring revenue base. JBT’s investment here is paying dividends with recurring revenue ahead 29% through the first nine months of 2017 including strong organic performance. Another initiative is to build our Asia-Pacific business. We continue to believe this is a promising market for JBT and our third quarter 2017 strong business activity translated into outstanding order rates. Of course our disciplined acquisition program remains an important component of our Elevate strategy. Over the past 12 months, JBT has acquired CAT a manufacturer of evaluated protein solutions Tipper Tie a leading provider of processing and packaging solutions, Avure a major provider of cutting edge high pressure processing solutions. POF which makes food and beverage billing systems and AMSS, a manufacturer of military aviation equipment. While total revenues from these acquisitions already put us ahead of pace on our Elevate journey, we have a solid pipeline and financing capacity as we look forward. The pipeline that’s focused on opportunities in proteins and liquid foods that enhanced JBT’s ability to provide comprehensive solutions that improve customer profitability. I want to specifically mention Avure, last quarter we talked about a significant expansion in the sales pipeline by leveraging JBT’s customer relationships and global reach. We are now seeing that interest translate into orders for Avure’s HPP systems. On a geographic basis, within FoodTech our protein business remains very strong in North America, Europe and Asia. Liquid foods activity is strong in North America and Europe while improving in Asia and South America. At AeroTech, North America which represents a majority of our business is quite healthy driven by strong airline and freight activity. Europe on the other hand remains competitive. Before we open the call to questions, I would like to take the opportunity to thank all of our team members, especially those in our locations in Florida and Texas. In the phase of personal challenges during and after the hurricanes, they took extraordinary steps to take great care of our customers. With that, we will open the call to your questions. Operator.

[Operator Instructions]. Our first question comes from the line of Walter Liptak with Seaport. Your line is open.

Hi thanks, its Walter Liptak good morning guys. I wanted to ask the first one to Brian his comment about 7.6% operating margins in the acquired revenue. Was that better than you were expecting or was that in-line and the operating leverage looked better this quarter than it did in the past. You know what you attribute that to?

Yes, so the 7.5% on the acquisitions around about 50 million of revenue. That was well in-line with what we expected and we would expect that to march up in the fourth quarter as well and that’s going to contribute to the margins. The operating leverage was really good for the quarter. We mentioned that on the last call that we are going to see really good order strength, revenue strength with only modest increases in our SG&A expenses. I would attribute that to all the work that we have been doing on our Elevate initiatives, some of the benefits from our restructuring program and frankly, just managing the business and just the fact that it is that when you have a lot of revenue growth on fairly flat SG&A expenses, that just naturally happens as part of our third and fourth quarter.

Okay, great. How much purchase accounting flow through this quarter and what do you are thinking about for purchasing accounting next quarter?

Right. So if you look at the 7.5% or so contribution from the acquisitions this quarter, the impact is about $2 million, when you think about inventory step up, the transaction costs and some of the integration costs. And that will go to a relatively modest level in the fourth quarter. We should see margins near north of 9% for the acquisitions in the fourth quarter.

Okay, great. And then it’s kind of the same question in FoodTech, the leverage there look pretty good. Was that related to mix or was it Elevate strategy improving profitability?

It’s the same answer. The operating leverage was the most important thing. Obviously, the acquisition improvement and a little bit better mix.

Okay. Alright, great. Thank you.

Our next question comes from the line of Chris McGinnis with Sidoti & Company. Your line is open.

Good morning, thanks for taking my questions and nice quarter. Can we just dig maybe a little bit into the - you talked about a little bit with the aftermarket, maybe, kind of the rate of growth and just kind of contribution for the quarter or so?

Yes, as we mentioned Chris, it’s both aftermarket and the recurring revenues and that’s been an area focus for us and as we mentioned, we are after a really strong start this year. And I can tell you, the initiatives around the increased technical support in the field, some more focused selling, some of our ProCARE agreements where we are selling new equipment with comprehensive warranty programs are all combining to generated great revenue stream. I would remind you from a CEO’s perspective, it’s great to see the strength of the aftermarket at JBT and the recurring revenues. And I think it just positions us fairly uniquely in industrial world to have that large percentage flowing through our business.

Great. Thanks for taking my questions. I will jump back in queue.

Our next question comes from of the line of Larry De Maria with William Blair. Your line is open.

Hi, thanks, good morning guys. A couple of questions. First, obviously at this point we are getting late in the year and you have a strong backlog and a lot of which will obviously hit this year. Just curious about how you think about the variability into year-end, given you probably 90% plus covered at this point. And just what are some of the puts and takes towards the variability into year-end, given that you saw a wide range on the EPS estimates, EPS guidance?

Larry, you have been following JBT for a while and you know as a management team, the fourth quarter is always a large quarter for JBT. And the variability really resides around our customers and we do our best to forecast. But they are building large projects updating facilities, building new facilities and a lot of times, our equipment sales get tight into their construction cycles and the management their projects, so it’s an imperfect process. And as we look at it, we do our best of forecast looking at specific knowledge around the projects and historic norms for the business and that’s what gives us the range we arrive at, but I would tell you that business is shaping up really well this year and we accelerated strongly into the third quarter. And we are really encouraged by the progress we are making here at JBT and just in general the activity in the marketplace is being really a positive for us and we think those are all really good indicators for the fourth quarter and as we head into 2018.

Okay. Thanks and I guess you just made the comment that things accelerated in the third quarter. So as you went to the third quarter, things continue to get better and is it safe to assume that organic orders in the quarter were also up, obviously acquisitions were a big impact as well.

Sure yes. As I look at it Larry, I was really pleased with our orders in the quarter. Combined with the strength we had in the first half, we are just in a great position to close out the year and move into 2018 and I think it’s important to look at a point of reference where we stand at the end of this quarter with the respect to orders and backlog is even better than where we were at this point in 2016 reading into 2017 and that’s the demonstrative of the strength we are seeing in the marketplace and with our customers.

Thank you. And maybe just last one, you did mention obviously the weather events for the Texas, I was curious f there was any impact to your customers or manufacturing that was a friction in the quarter, but related to that, if you can talk from a high level about maybe - I know obviously with respect there is no guidance for the next year are anything, but some of the puts and takes to think about from next year in a high level, because you have more of the acquisitions flowing through. You have less of the friction from M&A related cost and I don’t know if there is friction from the weather. So could you just talk about how to think about starting to frame next year from a high level if you can?

Well certainly from my perspective let’s start with the weather. We did see some impacts in our business, particularly in Florida, we have two operations there and we had some downtime, but we are able to perform through that, get our deliveries out when we hope to get them to meet our customer commitments and deliver the strong results you saw. None of which was structural or changed our thinking about the business for this year or next year. So the teams did a great job and that was in the backdrop of particularly in Texas into [indiscernible] Florida lot of people dealing with some fairly significant personnel challenges. So from my perspective, I think the company did a great job and our team members did just a super job bringing us through that. I don’t see Larry any structural outcomes for the company as a result of the weather that would change our thinking about the strength of our performance this year or heading into next year. As it relates to acquisitions, as you know we are a frequent acquirer, we certainly will have less friction from the current acquisitions as we are getting through the purchase accounting et cetera as we head into 2018, but for JBT you know we do always plan to be in the acquisition game. So there is always a potential that we will have other acquisition we will be talking our way through as we go into next year, but it’s around a strategy of developing proteins and liquid food solutions that enhance our customer profitability and allow us to provide more comprehensive solutions. So if you put that together, I think it just continuing on the value creation engine that we have at JBT.

Thank you for that. Would you expect on the margin front from the acquisitions to more or less be going into next year at corporate level for the business that were acquired and obviously you may do something between now and then, who knows, but which would not be subject to this but the stuff you have acquired has been a friction this year that could be at normal level going into next year?

Hey Larry this is Brian. So what I would tell you all the short-term impacts from inventory step up, integration costs, those should be gone. Now there is still the ongoing impact from very high amortization costs. So that does put a little bit of pressure our margins relative to our costs of baseline, but we do see it continued trajectory of good organic growth on those businesses and margin expansion. And I would encourage you to look at our EBITDA, because that obviously pulls away the amortization expense. So certainly on an EBITDA basis, these business are expected to perform at levels comparable to JBT in the aggregate.

Perfect. Thank you and good luck. See you.

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

Yes, thank you and good morning everyone. Maybe a quick question for you Brian. Trying to get some detail on your guidance here as you look at the fourth quarter. I’m guessing that your guidance implies about 15% operating margin in FoodTech. Am I close on that? Is that what you are thinking?

You are in the ballpark.

Okay. So one of the things that, I think we have kind of struggled with throughout the year was this year-over-year progression and margins here, when we are looking at fourth quarter of 2016 and I’m just kind of trying to range is to what the step-up would be here. If I’m remember correctly in the fourth quarter of 2016, there was impact from the CAT acquisition, it was something like $0.04. I think a lot of debt ended up flowing through the FoodTech operating margin. Am I correct?

Yes, that’s correct.

So I don’t know, if you have this number in front of you. But just on my model, it seems like on an adjusted basis for the fourth quarter of 2016 excluding this CAT impact. The margin would have been closer to call it 14.8%, 14.9%. Am I close there?

That sounds a little bit high. But it would be certainly better than 12%-ish that when we performed at. Yes, it would be a strong number.

Was it north of 14.5%?

I don’t have it in front of me. But it would certainly would have a 14% handle.

Okay. What we are trying to figure out here essentially is, the best way to think about margin progression year-over-year and sequentially. So I’m kind of trying to run through the numbers here. I don’t know if there is way that you can kind of maybe shed some light of this and get us all a little more comfortable with modeling assumptions?

Right. So you are talking certainly north of 100%, somewhere in the range call it 200 basis points sequentially and call it 100 basis points year-over-year-ish. And sequentially, you are going to get the benefits, a little bit better operating margin than we saw sequentially in 2016. So by virtue of some of our Elevate initiatives, some of that restructuring costs benefits that have come through, you are going to see that benefit. And then you also get sequentially from Q3 of this year too Q4 of this year. The better impact from the acquisition. So they were a drag in Q3, there will be I will call it a very low drag, if any drag in Q4. So hopefully that kind of describes it. But really the operating leverage and the cost management, the restructuring benefits, the Elevate initiatives are going to be the biggest driver, we will sequentially and year-over-year on the margin expansion.

Okay. Then if we can maybe go back to of your CAT, Tipper Tie, I mean you talked about Avure starting to gain some traction. I would love to hear about the other two companies as well and is there a way to frame what growth post acquisition has been versus your initial expectations for these businesses?

Yes Mig, from my perspective, we are very much on-track with what we hoped in terms of the activity we are seeing in the marketplace and for JBT what has been interesting to see unfold is a couple of things. First of all, with CAT, we had a company that was very much focused on the poultry industry and there has been benefits that we probably didn’t fully appreciate in our core organic base business in terms of their ability to have strong customer relationships and to bring JBT more strongly into that and where we were historically positioned and that’s been really nice to see. So we have getting these overlaps that we probably didn’t fully appreciate when we started the journey. Secondly, as you look at Avure, it was really a pretty small company that on a high growth trajectory and one of their biggest challenges was just getting the word out about the technology, their position in the marketplace, the strength of its capabilities. And if you think about JBT at our core we are very much a company that finds unique ways to preserve and deliver healthy foods to consumers and Avure is just a natural because it’s an extension of story, it’s the latest technology that supports it. So we have sales and marketing group at JBT that understands this and can bring those messages to the customers and have the greatest technologies. So that’s really the power of the acquisition program and our ability to help build these companies. Looking forward, I would tell you that we continue to see opportunities for other pieces we would like to put in the portfolio that would have the same benefits and we continue to work that pipeline.

Okay. Then I wanted to ask a little bit about anything that you are hearing from customers on the poultry side, obviously through the quarter we have seen a number of press releases pointing to some nice CapEx being deployed here. How does this play into your business in terms of demand and I understand that you are in secondary rather than primary processing. But you know kind of help frame this if you would?

Sure. Our customers are healthy in the protein industry in general and in poultry we are seeing a lot of great orders, but we are also as I like to talk about the customer activity that front-end sales orders is very solid Mig. And I would tell you that if you read beyond just the CapEx numbers you think about strategically where a number of the poultry and protein customers are going is they are continuing to identify products that allow them to add move value, right. Portioned, cooked, marinated, et cetera ticking a basic chicken, beef, pork and pretty more value around it which improves their profitability because the value added products ultimately sell for higher prices and higher margins than the base protein and that’s where JBT really has a strong position, right. We make all the equipment that add value to the food and the protein in this case and that’s what really allows us to help our customers grow their business first of all and secondly improve their profitability, because as they create these more value-added products, it definitely improves their profit picture, if you read their financial results. So from my perspective, I really like the way we are positioned and secondly, I would point out that historically at least the value-added pieces tends to be a bit less cyclical than the primary where those pieces of capacity go in larger chunk so to speak and then that takes a time for the marketplace to absorb that. Where the value-added investments tend to be, maybe a bit smaller and a headline number, but more frequent and less cyclical. So I really like where we are positioned and we will continue to look at primary and see if there is a right point for us to enter to acquisitions, but right now, we really enjoy the position we are at.

Okay. Last question for me on AeroTech. We don’t talk a lot about AeroTech, but growth here has been a lot better than I would have guessed. And I’m wondering through the prism of the last call it 12 to 24 months, when we look at your Elevate strategy, you talk about 3% to 5% growth through 2019. This business is running well ahead of that. Is there some sort of a cyclical demand pull forward that’s occurring right now or some kind of particular CapEx type driver that you are observing to where we should be sort of adjusting our expectations going forward to much lower growth either in 2018 or 2019 or is this growth driven by something that’s more intrinsic to the company?

Sure Mig. First of all, I would say the AeroTech team has done an excellent job this year. We are seeing strong growth. A good chunk of that Mig is coming from some of the new products we have invested in the last few years and our ability to get those in the marketplace. But secondly, I would tell you, I wouldn’t describe that is a pull forward. I would describe the industry is beginning to catch-up to some investments that have long been neglected by the airlines in terms of the infrastructure around the airplanes. And what that means is, it’s all around the customer experience and the ability for the airlines to earn a profit, right. The biggest fixed operating asset is all the airplanes, the ability to turn those more quickly and operate those more hours, improves profitability to airline and also improves the customer experience. And If you start to think about the equipment that we provide the jet bridges, the pushback tractors, the loaders, the latest technology in the icing. Those are all central to allowing the airlines to have a better customer experience and to get a better return from their investment in the aircraft. So from my perspective, we continue to see strength in the activity with the airlines and we don’t believe it’s a short-term situation we are enjoying right now. We know the equipment out there still aging is a total fleet both fixed and mobile. And we are pretty darn optimistic about the way the marketplace is delivering and developing. And I think our team is doing a good job delivering on bringing home some of those opportunities.

Alright. Thank you.

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

Good morning. So Mig asked a lot of questions and Larry too. And I just wondered, can you talk a little bit about pricing and raw material costs that wasn’t really covered at all. Just kind of more holistically going forward for the next 18 months or so?

Sure. If you look at our Elevate initiatives, we are always looking to create more value for our customers design and products that really improve their profitability and if you think about the food industry in particular Joel a key element of that is improving their yield on the basic food stuffs, they are manufacturing. So a number of the new equipment types that JBT has brought to the marketing and the area of portioning and cooking have technology to deliver on that and that certainly drives a desire to invest by our customers and makes that happen and hopefully as part of that when we improve the profitability for our customers, JBT can share. And then improve profitability, so that’s what we work very hard to get done. Secondly, on material cost I would say in the first front half of the year we are definitely seeing more pressure on some of the material costs particularly steel and in particular in our aero business but to a lesser extend in food. A lot of that was a round concerns around trade and tariffs, et cetera. We have seen that moderate more recently, so that’s a positive trend. I can’t predict exactly where we will go from a political situation on that but we seem to be in really good position. The second part of that material cost piece is we do work hard to manage that risk with our customers and our suppliers by making sure we have some clauses in our contracts were possible to recover. As materials move materially in a large way and then secondly we are going to have our suppliers where we know we have some base business that’s going to go out for 12 to 18, 24 months extending our buys to assure ourselves of the economics and we are fairly active in that this last year too, and I think we have done a reasonably good job of that. So altogether that’s a big part of what Elevate is and our supply chain activity in creating a delta around the material cost incoming and the actual price we spent with our suppliers so that we improve our margins there and then improving our customers profitability with our new products and sharing in a larger part of that profitability both are tailwinds that we are working to deliver on Elevate and continue to expand our margins.

Yes, and that’s the second thing I wanted to ask about it, it seems like between the acquisitions and a huge amount of internal improvement as well that the margin profile of the company is changing, maybe a little higher than how you were thinking about it 18 or 24 months ago. Is there starting to be more of a pathway to get to the mid-teens operating margin say in the next five years?

You know Joel, we did with the next level what I’m really focused my team on is achieving the Elevate initiative goals and we are on a good pace. We got off to a strong start with the acquisition activity, we are making our operational improvements and our goal is it all possible is to deliver those sooner than our initial commitment and we are working very hard to do that and we are off to a good start this year and that’s why where our energies are focused in as we get to the end of the journey, we will certainly come back and work to refine that framework. But our management team is just laser light focused on delivering those Elevate initiative results and if at all possible working very hard and thoughtfully in a very specific way to deliver those sooner.

Okay, thanks. I appreciate your time, thank you.

Thank you.

Your next question comes from the line of [indiscernible] with JP Morgan. Your line is open.

Hey guys good morning. Congrats on some good execution. What is the acquisition pipeline looking like out there?

Yes. [Steve] (Ph), we worked there very hard as a management team and we are really encouraged by where acquisition pipeline is at. As I mentioned in my prepared comments we are very focused on proteins and liquid foods. We are looking at expanding our solution set. So that we can be a more valuable supply to our customers and we are buys at it and as you know acquisitions are episodic, but our financial position is strong to complete some deals. And we have got the pipeline there and we have just got to continue to work it, to get some of these to close as we look forward.

Is there any uptick in people that are willing to kind of sit down and maybe discuss a little bit more rate of reasonable multiple, giving that earnings are now probably improving at some of these companies. I mean, what you are seeing in kind of the buyer and seller conversations?

I would say in general. Given the strong multiples that sellers are seeing, there does seem to be more of an interest and selling late this year and into next year. I believe that is propelling some companies to maybe sell a little early whether they are in family ownership or/and maybe financial buyer’s hands. But that’s balance by us being very strategically focused and disciplined in terms of our financial metrics. And for JBT much of work, we like to develop at all possible as a proprietary pipeline, where we are dealing with a lot of owners of businesses where they can really see the value being realized joining JBT globalizing their regional technology and making that happen. But in general, I would say, there does seem to be more interest in people marketing their businesses now than there was a year ago. unidentified Analyst: Great. Thanks a lot guys.

Thank you.

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

Hey guys good morning. Just follow-up on free cash flow. I know you sort of highlighted that what your conversion is going to be, but just looking on year-over-year basis. Should we expect free cash flow in the fourth quarter that sort of an absolute terms similar to 4Q of 2016? And particularly what I’m looking at sort of opportunity for advanced payment collection in the fourth quarter and inventory opportunity, because it seems that you can continue to release a lot of working capital relative to history?

Right. What I would tell you on the inventory side. You would see something similar to what you had see in the fourth quarter of last year. The customer deposits that is really dependent upon the order strength, we did have some pretty good orders in the fourth quarter of last year. So it’s really going to be dependent upon that. We did have a good - I don’t have it in front of me, but dollar-wise, it was a good number last year. We didn’t have as good of a third quarter last year. So we did pick-up a little bit. So I wouldn’t expect it to be quite strong last year. But I would expect certainly the inventory activity to improve. And as I said in my prepared remarks, we would expect - we are confident that 90% free cash flow conversion for the year.

I guess, I’m just trying to figure out how much upside there is to this number is just the question and what are the potential thoughts of upside.

Yes. Certainly there is potentially some upside, if we can perform on our inventory and they take a lot of orders, which results in advanced payments. It is frankly even for us very hard to quantify. But we are, we are confident and where we are going to collect on our - where we will perform on our inventory and our payables. It’s the advanced payments that could swing that number by a fair amount and I would like to give you a little bit more certainty in outside but its either hard for us.

Terrific, thank you very much.

Alright. Thank you.

Your next question comes from the line of David Stratton with Great Lakes Review. Your line is open.

Good morning and thank you for taking the question. Just really quick since most of the low hanging fruits has been answered. You know when we talk about your ERP system as you started July 1st upgrading, how has that initially been received and how you noticed any problems or any benefits as we move forward as far as will there be any impacts going into the future?

Sure. So what I would tell you is the launch was successful, there is always a little bit of bugs that come out in the back end in terms of other reports, the way we want them and is everything being measured the exact same way it used to be from a reporting perspective. But operationally its solid and from a - perspective its solid as well. So we have crossed all those bridges and we will continue to refine it. In terms of operational improvements, this is just the first installation, so there is nothing really material until you start to get the benefits of additional installations as you consolidate you general ledger, have better visibility on your overall data across the business. So nothing that I would point to for 2018, because we are going to have much more installations in that year. As you get into 2019 and beyond, you will certainly see some benefits on supply chain and the ability to manage your customers and what not.

Thank you. And then I just wanted to circle back to some of the acquisition impacts, are you still expecting to see the same revenue and EPS benefits that you enumerated in the last quarter’s call. Has there been any changes there or what should we expect in that round?

Yes, materially we are on-track to that, the only caveat to that is we did have a change in our share count by virtue of the equity offering in March. So you have to adjust about 7% or 8% for that but otherwise we are collectively on-track.

Thank you very much.

You next question comes from line of Walter Liptak with Seaport. You line is open.

Hi thanks, hey guys, I want to do a follow-up on Larry’s question about 2018. I know you are not giving guidance yet, but you know when you did five acquisitions that are going to be additive or accretive in 2018, you gave EPS accretion numbers. It sounds like those are all still on-track that maybe some of the acquisitions are even the doing better than when you acquired them. So you still expect that same accretion which I thinks adds up to about $0.50 or $0.60 per share?

Yes, as I just mentioned on the last question, it does add up to what we were expecting overall obviously -…

- things being equal you know to 310 for this we had a accretion and then there is going to be some growth for the organic plus some leverage on that.

Hey Walter, you did point out we don’t want to get on the call and give guidance for 2018, but I would say just if you think about JBT and the Elevate framework, we do intend to continued improve the business, we intend to grow organically. So we have got margin expansion, organic growth and then continuing in our M&A track. So you should expect us as a management team to continue to work all three legs of that stool. And we are busy working with our leadership right now to begin the steps to pull our planning together for next year and look at the all three elements to that. I would tell you that the one point that I really like to make is the customer activity is encouraging. And it all starts and stops with that, right. And as we look across both food and aero, we are just seeing a lot of positive project activity and work we are doing to customers, which really helps us feel well about 2017 and what we are doing is we head into starting 2018. And from my perspective, that’s really important for JBT and how we think about our future.

Sounds great. And we will wait until, I guess you give guidance next year to the fourth quarter.

Correct.

Okay. Yes we will wait till then, we just have to model that. So Alright. Thank you, guys.

Thank you Walt, thank you for that.

[Operator Instructions]. I see no further questions. I will now turn the call back over to Mr. Tom Giacomini for closing remarks.

JBT delivered strong third quarter results into the first nine months post a double-digit top and bottom-line gains. As such, we enter the fourth quarter confident and our full-year outlook and the long-term prospects for continued growth and margin expansion that’s part of Elevate strategy. Thanks again for joining us this morning.

This does conclude today’s conference. You may now disconnect.