JBT Marel Corp (JBTM) 2010 Q4 法說會逐字稿

Good morning, and welcome to JBT Corporation's fourth quarter 2010 earnings conference call.

I will be your conference operator for today.

At this time, all lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions) I will now turn the call over to JBT's Director of Investor Relations, Ms.

Cindy Shiao, to begin today's conference.

Thank you, Operator.

Good morning, everyone, and welcome to our fourth quarter 2010 conference call.

With me on the call are Charlie Cannon, Chairman and CEO, and Ron Mambu, Vice President and CFO.Before we begin, I want to remind everyone that the forward-looking statements in today's call are subject to the Safe Harbor language in yesterday's press release and 8-K filing.

Our 2009 Form 10-K also contains information regarding certain factors that may have an impact on our results.

These documents are available on our Investor Relations website.

Now, I would like to turn the call over to Charlie.

Thanks, Cindy, and good morning, everyone.

I'm pleased to report an outstanding fourth quarter.

We were cautious heading into the end of the year given the execution challenge of moving a high volume of products through our operations.

The fourth quarter is typically our seasonally strongest, but the results were even better than we expected.

We generated record quarterly profit, both in dollar terms and as a percent of revenue.

Revenue for the quarter was just slightly below our record set in the fourth quarter of 2007.

Compared to the same period last year, sales were up 17% and operating income was up 62%.

Diluted earnings per share were $0.56, a 51% improvement.

These favorable results reflect continued strength in freezing and protein processing, as well as ground support and gate equipment.

Demand for these particular products remain strong.

During the quarter inbound orders increased by 19% year-over-year, while backlog grew 36%.

Looking forward we expect growth rates to vary around the world with the developing markets generally growing faster.

Now let me provide some commentary on the business environment of each of our two segments.

First, JBT FoodTech.

Order activity for our freezing and protein processing lines was strong during the fourth quarter, principally driven by Eastern Europe and Russia.

This strength was underscored by the $4 million order we recently announced from a major convenience food processor in Russia.

Eastern Europe has also been very active.

As I communicated on our last earnings call, 2010 was a record year for sales in Germany.

Order activity in the UK is beginning to improve and building momentum into 2011.

However, Italy and Spain continue to be very soft.

In the Middle East, we have had healthy growth over the last couple of years despite the global recession.

However, we're concerned with the growing instability across the region.

Although it is far too early to determine the longer-term implications, we do expect our customers in Egypt to be in a holding pattern for the next two to three months.

Moving to North America, inbound orders for new equipment for the year increased more 50% over the prior year, driven primarily by the poultry industry, Activity in the poultry segment rebounded in 2010, and is back to the pre-recession level we saw in 2008.

A majority of these orders were for projects to improve labor efficiency, however corn prices have increased more than 80% since June of 2010, and poultry prices have declined 22% over the same period.

The near-term profit impact for most poultry processors will be is somewhat mitigated by their hedging of raw material commodity purchases.

Regardless, the continued pressure on our poultry customers to improve operational efficiency bodes well for JBT, since we have a long track record of providing solutions that improve throughput and yield.

Asia-Pacific continues to be active and we expect the order levels to remain high in this region in 2011.The Latin American market is slowly improving, but remains below the record of levels of 2008.

Overall we are pleased the current strong activity in freezing and protein processing across most of the regions we serve and are cautiously optimistic that current order levels will be maintained throughout 2011.

Turning to food processing the most recent USDA citrus report is projecting a modest 3% increase in the size of the Florida orange crop over last season.

Additionally, Brazil is projecting a more than 10% increase in its orange crop from the prior season, which is good news for us and our customers.

We're also seeing growing demand for fruit-based drinks around the world, and last week we announced two orders of approximately $8 million from the largest privately held beverage and confectionary company in the Middle East for these fruit-based beverages.

In regards to tomato processing, overall processed tomato output is forecasted to increase by double-digits in 2011, driven by China and the Middle East.

Consistent with that forecast, we recently announced an $8 million order from a Chinese tomato processor.

Moving to the sterilization product line, business is beginning to pick up in developing markets such as Southeast Asia, Russia, and China.

Lastly, FoodTech after-market volume for the quarter increased 16% year-over-year.

In summary, we expect continued food tech revenue and earnings growth in 2011, driven by improved market conditions for most of our product lines.

Moving to JBT AeroTech.

Activity remains strong in most of AeroTech's product lines.

Fourth quarter inbound orders for ground support equipment increased 46% from the prior year quarter.

Air travel and air freight volume for 2010 grew 8.2% and 20.6%, respectively.

International air travel is now 4% above the pre-recession peak in early 2008.

In January, the international Air Transportation Association increased its 2010 forecast of airline industry profitability for the second time to over $15 billion, with all regions projecting profits.

2011 traffic is projected to grow between 5% and 6%.

While higher fuel cost are expected to drive down industry profitability in 2011, profits remain quite healthy compared to historical averages.

Two major air freight companies are also projecting year-over-year improvement in their 2011 earnings guidance.

The severe snowstorms in Europe and North America may provide the opportunity to capture incremental deicer orders before the next winter season.

As a result, we are optimistic, that ground support equipment will continue its upward trend, reflecting the improve business environment for many of our customers.

Our gate equipment business continues to be strong.

During the quarter we announced and order for more than $7 million for additional land-based air conditioner units for the US Navy.

Our prospect list remains very healthy, and with the establishment of our Shenxian, China, facility, we are now able to pursue more international passenger boarding bridge opportunities.

As for airport services, although the outsource -- outsourcing trend remains stalled, we were pleased to have just been awarded the small new contract on the West Coast.

Moving to the Halverson program, as we previously communicated, loader shipments for the US Navy contract will continue through the second quarter of 2011, but we are also actively pursuing several near-term international orders which may help to extend production into 2012.

Finally AeroTech's after-market volume for the quarter increased 24% year-over-year, in line with improved industry profitability.

In summary, we expect JBT AeroTech's revenue to grow modestly in 2011 on the strength of ground support and gate equipment, but this growth will be partially offset by lower Halverson volume.

This lower Halverson volume, coupled with an increasingly competitive pricing environment in airport services, will continue to put pressure on segment margins.

To recap, we expect market conditions for most of our product lines to continue to improve in most regions.

After record quarterly results for the Company during the fourth quarter, we are anticipating a slower first quarter, consistent with the typical seasonality that we experience.

Although our first quarter results may, in fact, fall short of last year, our backlog position, both domestic and abroad, gives us confidence that our first-half earnings will surpass the prior year.

Assuming our order activity remains as it is today, we are cautiously optimistic that our 2011 full year earnings will improve over 2010, with the year following our typical quarterly seasonality.

But given our lack of visibility beyond the first half of 2011 and the continued high levels of global economic and political uncertainty, we are not providing a specific EPS guidance range today.

Finally, I want to take this opportunity to compliment all of our employees around the world.

2010 was a very strong recovery year for us.

Our operating income increased 16% while over all revenue grew 5%, full-year EPS increased 13% year-over-year.

and this is in large part due to the efforts of our outstanding people.

Now I'll turn it over Ron Mambu to provide more detail on our financial results.

Thanks, Charlie.

Our strong finish in 2010 resulted in record high operating income for the quarter.

Fourth quarter revenue of $287 million increased 17% from the prior year quarter.

Our operating income as a percent of revenue improved 280 basis points to 9.9% from 7.1% in the prior year quarter.

Diluted earnings per share for the quarter were $0.56, up 51% from the same period last year and better than we had expected.

Both inbound and backlog improved year-over-year by 19% and 36%, respectively.

Net debt at December 31 was $133 million, unchanged from the third quarter.

During the quarter we recorded $2.8 million in restructuring charges to continue to reduce cost in our AeroTech operations.

To improve the ongoing review of our segment operating results, we are separately disclosing restructuring charges as part of corporate items, and we have revised the historical segment results to reflect this change.

I will now comment on segment operating results, and I'll provide more details of corporate items later in my remarks.

For the quarter, FoodTech revenue of $159 million was essentially flat versus the prior year quarter.

It's important to note that the during the prior year quarter we shipped several large orders totaling over $20 million that were inbounded in 2008.

Our freezing and protein processing product lines continued to perform very well, and we saw improved demand in fruit processing equipment.

Revenue was up 27% sequentially.

FoodTech's operating profit was $20.2 million, up 25%, and operating profit as a percent of revenue increased 270 basis points, 12.7%.

The strong margin performance reflected a favorable mix of smaller projects that typically carry a higher margin, increased after market revenue and lower expenses.

Additional 2009 results included a nonrecurring charge of $1.4 million, which also helps the comparison.

Differences relating to foreign currency translation for the fourth quarter versus the prior year quarter were minimal .

FoodTech's fourth quarter inbound orders increased 14% for both year-over-year and sequential comparisons.

This was mainly driven by improving demand in the fruit processing product line.

During the quarter we secured four large orders totaling $25 million, all from customers in developing markets, China, Malaysia, Russia and the United Arab Emirates.

Order activity for freezing and protein processing equipment also remains strong.

Our European inbound orders grew 40% year-over-year and were near pre-recession levels.

FoodTech's backlog of $103 million is up 7% versus the prior year quarter, but down 12% sequentially, which is a function of the higher fourth quarter shipments.

Moving to AeroTech, the fourth quarter was a record for segment -- for the segment in both revenue and operating profit.

Revenue of $125 million increased 47% from the same period a year ago.

This reflected a significant rebound in our ground support equipment product line and continued strength in gate equipment.

AeroTech operating profit of $13.7 million increased 69% from the prior year quarter.

Segment operating margin improved 140 basis points, driven by improved after-market volume, our ability to leverage fixed expenses from higher sales volume and the benefit of lower cost from past restructuring actions.

However, this was partially offset but unfavorable product mix due to lower revenue from higher margin Halverson loaders.

JBT AeroTech's fourth quarter inbound orders were healthy, reflecting a year-over-year increase of 24%.

The increase across most of AeroTech's product lines, specifically ground support equipment, was up 46%, and gate equipment increased 20%.

Inbound orders were down 23% sequentially, primarily reflecting the seasonality of deicer ordering patterns.

AeroTech's' backlog was up 60% year-over-year, but down 19% sequentially, a function of record shipments in the quarter.

Now regarding corporate items.

Our full year effective tax rate for 2010 was 36.1%, higher than September year-to-date results of 34.6%.

The increase was primarily due to a greater mix of income in higher tax jurisdictions, mainly the US.

Also during the quarter, we recorded additional tax expense for repatriating approximately $50 million in cash from Europe to the US.

This was completed in January 2011.

As most of you know, the majority of our debt is in the US, and the repatriation will reduce our interest costs going forward.

The additional tax will be offset by available foreign tax credits, and therefore will have no cash cost.Our expectation for 2011 full-year tax rate is between 34% and 36%.

Total corporate items, excluding interest for the quarter, were $1.2 million favorable versus the prior year period.

During the quarter our LIFO reserve requirements were reduced, reflecting lower year-end inventory levels.

Lower net LIFO expenses and gains on foreign exchange hedges, were however, partially offset by $2.8 million in restructuring charges.

For 2011, we expect total corporate items, excluding interest, to be 10% to 15% higher than 2010, reflecting the assumption of no significant foreign exchange movement.

Full year capital spending and depreciation and amortization were $24.6 million and $22.9 million, respectively.

Capital spending increased during the fourth quarter primarily due to increased leased equipment placed with FoodTech customers and the relocation of our Chicago corporate headquarters.

As for the Florida citrus facility, we continue to evaluate different alternatives which have taken longer than we initially expected.

We're anticipating a final decision in the next few months.

While most of the expenditures will be incurred in 2012, there will be some impact in 2011.

As a result, we expect the 2011 spending to be in the range of $26 million to $28 million, 15% to 20% higher than our historical average.

Net debt was $133 million at December 31, up $15 million from 2009, and essentially flat with third quarter 2010.

The super strong rebound in AeroTech during the second half of the year, increased working capital requirements at year-end, which negatively impacted our cash-flow generation.

However, this should lead to higher-than-normal cash-flow for the first half of 2011.

At the end of the fourth quarter, we had $14 million in cash on hand and about $128 million in available and undrawn credit lines.

Lastly, our remaining $25 million interest rate swap expired on January 31, 2011.

As a result, our fixed--rate debt now consists of just $75 million private placement, which matures in 2015.

We plan to file our 10-K tomorrow so there will be more detailed information readily available for your review.

In summary, we're very pleased with our operating results and order activity.

We drove year-over-year improvement and all key measures of our operations during the quarter, including revenue, margins, earnings, inbound orders and backlog, all of which supported a strong finish to 2010.

After record quarterly results for the Company during the fourth quarter, we are anticipating a slower first quarter than the prior year, but this is consistent with our typical seasonality.

With a healthy backlog position and continued momentum and order activity, both domestically and abroad, we expect our first-half earnings to surpass the prior year.

With that, we'd like to take your questions.

Operator, please open up the

(Operator Instructions)

We'll pause for just a moment to compile the Q&A roster .

Your first question comes from the line of Michael Saloio of Sidoti &

Hi, Mike.

Hi, good morning, guys.

Sorry, I jumped on the call a little bit late.

I'm trying to figure out why after 60% backlog growth at AeroTech in the third consecutive quarter of really robust backlog growth should we only be looking for modest revenue growth in 2011 at AeroTech?

Well, we've got -- this is Charlie.

We've got the Halverson volume coming down, and we've had high levels in gate equipment for the last couple years.

We just now got our international operation open in August.

We don't see a lot of hyper-growth from the gate equipment because we've been at record levels for two years.

We do think the ground support equipment will be again showing revenue growth.

The other thing, gate equipment has really long lead times, but it's not like it shows up.

We can see out there a year for gate equipment.

What are-- can you give us a sense of what the lead time is on gate equipment?

It's going to vary depending on the size of the project.

The project with 40 bridges might be delivered over a two-year period, and a project with one bridge might be delivered four months from now.It really varies.

But in general they're a lot longer lead time than we have in the other product line.

Okay.

Are there any other headwinds that we should be looking for at AeroTech in 2011?

I think the number one facing in the industry will be fuel prices, so that's definitely a headwind.

And we've been waiting to see -- in some ways the last two years the gate equipment, to be honest, has been a little bit surprising to us because you'd think with municipalities being under pressure, you'd see some fall off, but it hasn't happened yet.

I think the international arena will continue to grow, though.

I think, Mike -- it's Ron.

I think the airlines had a super recovery year in 2010, and IATA's not forecasting, a repeat of that, actually I think they've lowered their industry forecast for the airline profits for 2011, mainly as a result of what Charlie was saying, is fuel cost.

And depending upon what happens in the Middle East and with fuel, it could create a headwind for not only the AeroTech space but lots of other concerns as well.

We just had a Board meeting last week, and as you know, Jim Goodwin, the former CEO and Chairman of United Airlines is on our Board.

We were talking about, historically, at this point in the cycle is when the question is will the airline industry maintain supply-side discipline.

I mean, they've got load factors that are at record highs right now, and they're making record kinds of money.

Unfortunately, if you look at history, a lot of times what happens next is they add a lot more capacity in all the routes and compete away the situation.So, who knows.

It's -- you can see some industry moves to improve profitability.

American Airlines going off of the fair -- I can't think of the firm that does the fair prices, but they're trying to get control of their pricing and make it less transparent.

They're doing all these fees.

So you can see a lot of moves that are trying to fix their industry profitability structure.

Okay.

This might be tough to answer, but what do think benefits JBT AeroTech more?

I mean,p what do you think impacts more, the actual profitability of the airlines, or capacity?Because we might see some capacity cuts to the airlines here, but overall capacity this year has been relatively low with profits being relatively high.

I will always vote for profitability because we're last in line on spending, on capital spend.So they make money, the first thing they want to do is get fuel efficient aircraft and do things that improve that because that's more direct to their income statement.But as I've said many times in the past two years, if you look out the window of an airplane, tell me what you see on the ramp that looks new.

And so, the last big, big buys of ground support equipment by airlines was more than 10 years ago.

So if the airlines remain in high profitability levels, I think that's good news.

I'll take that over more capacity.

Okay.

And just one more last quick question, high level on FoodTech.

How much is M&A activity hindering your customers' sales, and have you started to see any of these larger processors move towards rationalizing their plans, and could that potentially be a benefit next year in 2012?

Well, I assume you're talking about, we have two large Brazilian customers, Sadia and Perdigao, that have yet to consummate their deal as they work with antitrust both in Brazil and in Europe.

The merger of Citrosuco and Citrovita which Cade in Brazil is still challenging, and now the Europeans are also challenging.

So, I would say we haven't seen that consolidation activity, like you're saying.

It's sort of -- we're sort of on hold in those particular areas.

Is that what you're referring to?

That's fair enough.

I'll jump back in now.

Well, I guess -- Cindy just point out, the JBS and Pilgrims Pride the Brazilians come in, we have benefited from that.

Part of our poultry rebound this year was in fact helping Pilgrim's Pride, I guess you'd say, retool -- retune their operations.

So we had a lot of poultry equipment sales into that, they rationalized that capacity, that's a good comment.

Okay.

Thanks.

Your next question comes from the line of Liam Burke of Janney Capital Markets.

Morning, Liam.

Morning, Ron.

Charlie, you talked about the orders recovering from pre-recession levels but the mix being a little different -- fewer large orders, more smaller orders -- is that a permanent change in the business, and is the fact that you've got more small orders a benefit to margins, gross margins?

Well, it's hard for me to say on the affirmative change of the market.

You'll recall a year ago, I think it was one year ago this very call, I said that we did not have a single order in FoodTech's backlog greater than $5 million, and that compared to year-end of 2008 where we had, I think, five projects over $60 million.

And -- if my memory is right.So the answer going back, do I have -- do we have any of those $12 million, $15 million mega projects in backlog?

The answer is no.

But we have seen a return to what I'll call larger projects, and so -- I mentioned some of them in my remarks, an $8 million Middle East order for fruit-based drinks, a big order in Malaysia for the canned shelf-stable milk stable products.

And so that feels good.

So those $8 million orders don't carry the margin -- they're typically lower margin because we have more pass-through during the project than, say, smaller orders.

That's the bad news.

The good news is having some of those in backlog gives me more visibility.

A year ago I couldn't see past the first quarter, and now we can look out and see pretty much the first half and the shape of the first half, which we commented on.

That's the trade off.

The bigger orders give you more visibility and loads you up, and the smaller orders help your margin.

Thanks, Charlie.Ron, you talked about restructuring charges.

How does that affect the SG&A line going into 2011?

Liam, it's -- the restructuring activity is going to take place over the year.

Actually some of it will get completed early in 2012.

So we're not going to see the full benefit of that until probably midway through 2012 in terms of showing up on lower cost, and the cost will be -- not just be in SG&A, I think most of it will be in cost of goods sold.

Okay.

Thank you.

Your next question comes from the line of Robert Werthheimer of Morgan Stanley.

Good morning, everybody.

Good morning.

I guess I have two questions, margin-focused.

I think your margins in the quarter, at least on our short history that we have, were a record by couple hundred BPS.

Could you talk a little bit about how you feel about those margin in terms of whether it's influence from all that you've done on restructuring and improvements versus OE versus after-market mix?

And could you maybe comment, I think you've talked about long-term margin goals of 12%, 13% in FoodTech and maybe 10% at AeroTech, and whether you're getting more confidence that you've got things humming, and those are low goals or not?

I would say, Rob, clearly what we popped in the fourth quarter is not going to be sustainable here in the near-term.

We have everything go the right way in terms of mix of after-market, smaller projects.

We did show, basically, volume leverage at AeroTech.

They shipped a record amount of volume.

And even though we always claim we don't have too many fixed costs, when you pump that much volume through your operations, you get leverage on your fixed cost.

So we had all of that going in the right direction.

We have said that our aspirational goals are basically 50 basis points a year improvement, just continuous improvement program.

And we have said, as you pointed out, 12% to 13% would be where we would like to go in FoodTech and try to get near 10% AeroTech.

As we sit here today, we're looking at some headwinds.

We do pay one-third of our bonus, as you know, on EBIT margin percentage.

We are sitting here today with commodity cost inflation, which is not (inaudible), but we have to manage it in terms of steel prices and other input costs going up.

And I think we're going to see -- it's a competitive environment out there.

So the headwinds are trying to get margin improvement in this kind of environment is a challenge.

We just finished our strategy, as you know, last year, and margin improvement is one of the key elements.

And we're having a -- the first total management meeting of the top managers of the Company in a couple weeks in March, a couple weeks from now, and we're going to be spending a day on that topic because we do think we need to improve it, but it's going to be a challenging year this year to maintain margins.

All right.

Perfect.

And that's really what my second question was.

You touched on it there and before.

On the one hand, you've got very strong market positions, very high market shares and you're leader.

On the other hand, you're in an industry where your customers, both probably on the FoodTech and the AeroTech side, are experiencing more than their fair share of commodity pressure versus some other industries.

How -- can you just -- maybe just elaborate just a little bit on what that pricing environment feels like right now?

Are customers being receptive to pass-throughs?

More so than last time materials spiked?

I don't know if I can compare it to previous.I would say it's not any worse than it was last year, but we do have some big, powerful customers, and there are competitive alternatives, even though we think we're the leader.

You're always being compared to the cheaper products.

As you know, we're the highest-priced guy in both segments in every product line expect for de-icers.

So, I don't know that it's any worse, but I think the commodity inflation is going to put pressure on the customer base.

I would agree with that part.

Okay, I'll stop there.

Thank you.

Your next question come comes from the line of Jason Ursaner of CJS Securities.

Good morning, Jason.

Good morning.

Can you talk a little bit more about the factors that are driving the strength in the after-market business?Is there a greater element of co- dependence at your customers, or is it really just the recovery and neglecting of maintenance in the downturn?

I think a big piece of it is recovery.

I think we mentioned in our remarks that, especially in the AeroTech sector, when they're really hurting they just shut down everything.

And so when they start making money, they go, oh my gosh, here is all the stuff we should have been doing to maintain and we weren't doing.

So the bump-up we saw in AeroTech was greater than FoodTech, as a matter of fact.

In the FoodTech area, we keep growing the installed base we'd hope to see, and it's one of our strategic aims, is to grow our after-market.

So, it's kind of interesting, we commented about the $8 million orders carry lower margin than the smaller orders, but the $8 million order is what builds your big footprint around the globe of customers that have a significant -- made a significant investment that ultimately drives after-market.

So it's one of our strategic initiatives is to continue to grow our after-market and, frankly, we think that's one way to help our margins.

Do you see it creating pent-up demand for new equipment underneath?You mentioned in GSE, for example, the last major build-up was over 10 years ago.

Yes, I think in GSE in particular, that product line of all, I would say if I looked at all of our various product lines around the world and say in which product area do we feel customers have underinvested in the last 10 years, GSE would be the top of the list.

I'm not sure I would say that about necessarily anybody else for new equipment.

Okay.

And in terms of size of orders, you mentioned not permanently, I guess, redefining what constitutes large, but is most of the activity for capacity expansion projects, whether they're mega projects or maybe a little less than the $10 million range, are they all coming from the emerging economies?

Do you see anything -- ?

That's an interesting comment, because that is exactly what we've seen this past year.

This fruit-based drink phenomenon, I don't know if -- Coca-Cola has got a drink called -- I think it's called Pulpy, and it's in China, and it just made -- it just passed the $1 billion dollar mark as their ninth billion-dollar brand or something.

And it's basically a -- it's water and about 10% or 15% juice and throw in some citrus pulp, and it's got (inaudible), and it's a cheap drink that is healthy, and it's $1 billion dollars in China.

It is very similar -- different product, but it's a similar kind of idea that we just sold in the Middle East.

And so as the developing world starts developing a taste for products, looking for recreational and healthy beverages, we see that being a growth area.

And then for Ron, just on the accounts receivable, increased a little bit, it looks like on the -- decent amount.

Can you talk about the normal cash conversion cycle of Q4, and were there were a number of orders that maybe went out late in the quarter which is why we're seeing the increase there?

Yes.

When you look at the balance sheet, I think our receivables are up $50 million from the beginning of 2010 to the end of 2010.

It reflects the heavy weighting in the fourth quarter, and a lot of it is was in December.

We're looking at a large collection that will alter our seasonal pattern.

We talk a lot about the seasonality of our sales and earnings, but there's also a seasonality in our cash flow.

And typically what we see is cash flow over the course of the year is negative in the first part of the year and is positive in the second part, and that's going to change a little bit this year.

We should be positive in the first part of this year as a result of bringing down those receivables.

In terms-- relating to terms, our terms are a little bit lengthier in the developing world versus sales in the US.

In the US and in Europe, we often have most of the order paid for by the time it leaves our factory with a freezer or oven.

That's different than in the developing world.

So terms are a little bit longer, but they're always very highly-secured either with government guarantees or backed up with advanced payments and letters of credit.

So our bad debt experience has been minimal, hardly -- zero, hardly none over the last couple of years, and that's typically our experience.

Okay.

Great.

And then, Charlie, you mentioned weather possibly extending the de-picer order season.

But on the other side of that, could weather potentially have any meaningful impact on Q1 deliveries for some of your other business lines?

I'm not sure I grasp what you're --

In the sense that you couldn't -- that there would be a delay for some orders and they would slide to Q2?

Well, part of -- I can't think of a weather-related.

We do have, we didn't say this in the remarks, but we do have a couple of projects that were scheduled for delivery in the first quarter where the customers, because their projects is behind, have asked us to delay shipment until April or May, as part of what's tweaking our first quarter down a little bit.

Okay .

I can't think of any weather-related delivery problems though.

Okay.

And then just acquisitions, what are you seeing in terms of quantity and quality of potential targets?

And is the primary challenge still price expectations?

I think the primary challenge for me is price.

I mean, we've got one small deal done in Asia.

We're extremely happy with it.

We've picked up some business as a result of it that wasn't even in our evaluation.

And as the FDA takes a stronger stance on imports, we're going to be well-positioned in Asia to serve customers that are trying to export to the developed world.

So that little one I feel good about.

Our competitor, Convenience Foods, I don't know if you saw over the Christmas holidays, was purchased by a German company called Gea, G-e-a.

I think they're $5 billion or $6 billion, and they're in all kinds of industries, oil and gas, chemicals, process technology industry, and they like the food industry.

As best we can tell, they paid north of 10 times EBITDA on an international accounting basis.

On a GAAP basis, we're not sure, but it was a very, very rich price tag.So, I don't know what to do about that.

Possibly, we're probably too conservative, but I don't want to overpay.

Okay, great.Thanks for taking all my questions.

(Operator Instructions)

Okay.

This concludes our conference call.

Thank you, everyone, for joining us on the call.

If you have any further questions, please give me a call.

A replay of our call will be available later this morning.

Thank you.

Have a good day.

Thank you again for participating in today's conference call.

This does conclude the call.

You may now disconnect.