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Operator
Good morning and welcome to the JBT Corporation second-quarter 2013 earnings conference call. My name is Kayla and I will be your conference operator 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, Mr. Debarshi Sengupta, to begin today's conference.
Debarshi Sengupta - Director of IR & Financial Planning
Thank you, Kayla. Good morning, everyone, and welcome to our second-quarter 2013 earnings conference call. With me on the call are our Chairman and CEO, Charlie Cannon, and our Vice President and CFO, Ron Mambu.
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. Our 2012 Form 10-K also contained information regarding certain risk 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.
Charlie Cannon - Chairman, CEO & President
Thanks, Debarshi, and good morning, everyone. Today I will provide some commentary on the business environment for our two segments starting with JBT AeroTech and I'll also discuss our business outlook for the year. Ron will cover our second-quarter financial results before we open up the call to questions.
In AeroTech the International Air Transportation Association, or IATA, recently revised its 2013 profitability forecast from $10.6 billion up to $12.7 billion. Coupled with projected growth in passenger traffic and air freight shipments this year, we view this as further indication of a strengthening long-term outlook for the airline industry.
Orders in our largest AeroTech business, gate equipment, doubled sequentially. However, during the quarter we were informed of delays in airport construction schedules for a couple of large passenger boarding bridge projects. While we still anticipate winning these orders, projected revenue has slipped into 2014. For the full year we expect gate equipment sales to be up relative to last year but lower than prior expectations.
Moving to ground support equipment, we indicated in our last earnings call that the second quarter was off to a good start and we expected an increase in demand for deicers. Driven by strong orders in the quarter, backlog in the business increase substantially, up nearly 25% year over year. We already have more deicers in our backlog than we sold and all of 2012 with potential for additional orders.
Lastly, orders for our Halverson military loaders continue to be delayed by the implementation of sequestration measures by the US government. Despite this we continue to pursue several international opportunities as well as several within the U.S. Army. Overall for AeroTech we started off the year slowly but order activity picked up substantially in the second quarter and we anticipate this to continue through the third quarter.
The majority of AeroTech's current backlog is scheduled to convert to revenue in the fourth quarter. However, due to the slippage in passenger boarding bridge orders, we are revising our revenue expectations to low single-digit percentage growth for AeroTech in 2013. In addition, where expecting AeroTech operating income margin to be down approximately 50 basis points relative to adjusted margins from last year.
Turning to FoodTech, we ended the quarter with near record backlog about 26% higher than the prior-year level. Backlog for freezing and protein processing equipment was up over 10%, largely driven by strength across North America and Asia in the first quarter. In North America demand in the first half of the year was driven by ready meals and meat processing. Second-quarter inbound orders decreased sequentially, but we have almost 80% of our forecasted full-year equipment volume on hand.
Moreover, with corn trading at prices nearly 40% lower than prior year highs, and poultry prices up over 30%, we expect increased demand from North American poultry processors over the next six to 12 months. Thus we are very comfortable with our forecast for the region.
In Asia we saw an increase in orders in the quarter driven by QSR suppliers expanding production. We are also seeing strong demand in China for our locally manufactured smaller capacity classic 600 freezers. Backlog for these freezers in China is now double -- nearly double our initial targets. We are seeing increased quote activity as avian flu concerns from earlier in the year continue to subside and we expect equipment orders to increase in the back half of the year.
In Europe freezing and protein processing equipment orders were down in the second quarter. However, based on conversations with customers, we are anticipating a pickup in orders later in the third quarter as the summer vacation period ends. Aftermarket volume for freezing and protein processing equipment increased in the quarter particularly in North America. We anticipate aftermarket volume to a hold through the rest of the year.
Moving to the in-container sterilization product line, quarter-end backlog was once again at a record high, up nearly 70% compared to 2012. We have a healthy equipment prospect list and anticipate increased aftermarket volume in both Europe and North America. The sterilization product line is well-positioned for a record year in 2013. Additionally, we are already winning projects for next year and we anticipate this business will enter 2014 with another strong backlog position.
Moving to fruit and juice processing -- the USDA has revised down its forecast for Florida's 2012-2013 orange crop to 133 million boxes, down 9% from the prior season. In addition, the USDA's foreign agricultural service office in Brazil forecast the 2013-2014 orange crop in Brazil will be lower than last year. Despite the unfavorable impact of the revised forecast on the variable revenue component of our lease contracts, citrus is on track to have a strong year in 2013.
On the business front we entered into lease contracts with several new small customers and also successfully negotiated a contract renewal with a major customer. Both accomplishments in the quarter position the business well for the future. For FoodTech overall we ended the quarter with a strong backlog position. Though a high percentage of the backlog will convert to revenue in 2013, particularly in the fourth quarter, we expect to enter 2014 with a backlog slightly higher than the excellent backlog we started this year with.
Consistent with the guidance we provided in our first-quarter earnings call, we project mid to high single-digit percentage growth in FoodTech revenue in 2013. And we expect full-year FoodTech operating income margin to be roughly in line with the 11% margin achieved in the first half of the year. This represents more than a 100 basis point improvement over last year's margin setting up FoodTech for record performance this year.
In summary for the full year 2013 we are revising our projected diluted earnings per share from continuing operations to be in the range of $1.32 to $1.40. The upper end of the range reflects potential for additional revenue opportunities across some of our businesses. Driving the lower end of the range are risks associated with certain project schedules. Furthermore, we expect third-quarter earnings to be slightly up from the prior year followed by a very strong fourth quarter. Now I'll turn it over to Ron Mambu to provide more details on second-quarter results.
Ron Mambu - VP, CFO & Controller
Thanks, Charlie. Revenue for the second quarter was $227 million, up 6% year over year. The increase was driven by higher equipment sales in FoodTech and higher recurring revenue across both segments. Gross profit margin and operating income margin were essentially flat relative to the prior year as increases in FoodTech were offset by lower margins in AeroTech.
Second-quarter diluted earnings per share from continuing operations was $0.30, an increase of 11% over the prior year period. Second quarter backlog of $352 million increased 21% from the prior year period after adjusting for the removal of backlog associated with two canceled U.S. Air Force contracts.
Now turning to segment results, AeroTech's second-quarter revenue declined 2% compared to the same period in 2012. Strong ground support equipment sales and aftermarket volume, particularly for deicers and cargo loaders, was more than offset by lower sales of passenger boarding bridges, military loaders and automated systems.
AeroTech operating profit margin in the second quarter declined significantly from the prior year period. The absence of a $1.4 million gain on the French Swisslog transaction in the second quarter of 2012 contributed to the profit decline. Adjusting for that gain, margins contracted approximately 300 basis points. This decrease was largely attributable to unfavorable product mix and low margins on certain equipment rebuild orders.
During the quarter we announced several large orders for ground support equipment, gate equipment and automated systems. These orders drove a 44% increase in inbound sequentially. AeroTech backlog was up 16% relative to the prior year after adjusting for the two U.S. Air Force contracts.
Turning to FoodTech, second-quarter revenue of $152 million increased $15 million or 11% year over year. The increase was mainly driven by $12 million in higher equipment sales across fruit and juice processing and in-container sterilization equipment. Recurring revenue contributed $2 million to the total increase driven by higher aftermarket sales in North America for freezing and protein processing and higher lease revenue from citrus juice extractors.
FoodTech operating profit increased by $6 million in the second quarter, operating income margin expanded approximately 280 basis points year over year to 13%. The expansion was largely a result of continued margin improvement initiatives including higher margins on freezers manufactured in North America and cost reductions.
As Charlie noted, second-quarter backlog increased 26% year over year to $195 million. The increase was driven by strong demand for in-container sterilization, fruit and juice processing and freezing equipment.
Corporate items in the second quarter were $10 million, an increase of $1 million from the prior year period. The unfavorable comparison was driven by higher compliance costs, incentive-based compensation and pension expense. Also in the quarter we recognized a $1.2 million net loss on foreign currency positions which also factors into our earnings guidance for the year.
For the full year the Company expects corporate items, excluding net interest expense and any future mark-to-market impacts, to range between $28 million and $30 million. Cash generated by operating activities during the second quarter was $13 million driving debt net of cash to a record low of $84 million.
Income tax expense in the second quarter of 2013 reflected a full-year estimated effective income tax rate of 34%, on the upper end of our previously guided range. A higher percentage of US income is driving an increase in our effective income tax rate.
Capital expenditures for the quarter totaled $6 million essentially flat relative to the prior year period. For the full year capital expenditures are projected to be about $33 million as spending on the replacement of our Lakeland, Florida manufacturing facility will pick up in the second half of 2013. We plan to file our 10-Q tomorrow so there will be more detailed information readily available for your review.
In summary, due to project slippages in AeroTech we anticipate achieving low single-digit percentage revenue growth in 2013 and segment operating profit margin roughly 50 basis points lower than last year's adjusted margin.
For FoodTech, given its strong backlog position, we expect to achieve mid to high single-digit percentage revenue growth in 2013 and approximately 11% full-year segment operating profit margin. This represents an improvement of over 100 basis points from last year's margin setting up FoodTech for record performance in 2013.
We expect third-quarter diluted earnings per share from continuing operations to be slightly up from the prior year followed by a very strong fourth quarter. For the full year 2013 we project diluted earnings per share from continuing operations to be in the range of $1.32 to $1.40. With that we'd like to take your questions. So, operator, please open up the call.
Operator
(Operator Instructions). Jason Ursaner, CJS Securities.
Jason Ursaner - Analyst
Just first on the two passenger boarding bridge projects, I guess can you go over what is your confidence in eventually winning these two projects? And does the push out change that probability or win rate at all?
Charlie Cannon - Chairman, CEO & President
No, we have the same probability of winning that we had before. I mean, one way of looking at this, I think we have always said -- I think we've was told you that we have the best visibility in Jetway of all of our businesses. And I think the more accurate way to say that is we have the best visibility in Jetway of all our businesses after we get the order, because they're big orders and they've got longer lead times.
With a certain amount of humility it is obvious that we sometimes struggle to predict when the order comes in given the nature of the beast. These airport projects can be multibillion-dollar projects and our $8 million order is kind of not driving it, if you follow that. So in the cases -- there were some international and a domestic and we've already been told on the domestic one it is our order and in that particular project I think it is an FAA delay for approval. But I don't -- we don't -- this delay is not meant to signal we have dealt about winning the ones that slip.
Jason Ursaner - Analyst
Okay. And then just acquisition wise, relative to your own size, you guys obviously maintain a lot of capacity on the revolver at pretty attractive rates. So just maybe an update on where you stand on the acquisition front at this point and how the pipeline is evolving?
Charlie Cannon - Chairman, CEO & President
Well, obviously this is a tricky one for us to comment on, so I'm not going to say a lot about a pipeline. I will say that we are encouraged let's say relative to a year ago in terms of the number of different opportunities we are looking at. That is not to say I have got any of them across the finish line yet, but it seems to be right now -- I won't describe it, maybe Ron would comment -- but I think it seems to be a richer pipeline than we have had in a couple of years for small bolt-ons.
Ron Mambu - VP, CFO & Controller
I agree with that, Jason. Although I think I would add that our focus remains on the bolt-on variety versus anything like JBT size.
Jason Ursaner - Analyst
But is the bolt-on I guess more similar to the sizes you guys previously talked about or the South Africa, Thailand bakery one? I mean those were smaller than that.
Charlie Cannon - Chairman, CEO & President
Yes, we would like -- there are a couple we're looking at that are a little bit bigger than those, but they are not going to be huge. I mean a $20 million or $25 million acquisition is right in our wheelhouse.
Jason Ursaner - Analyst
Okay, I appreciate it, thanks. I will jump back in queue.
Operator
(Operator Instructions). Adam Peck, Heartland Funds.
Adam Peck - Analyst
So, did you say that FoodTech backlog was close to record?
Charlie Cannon - Chairman, CEO & President
Yes, that is correct.
Adam Peck - Analyst
Okay and when you think about AeroTech for next year, does that mean there is a high likelihood that the first half of next year would be much stronger than you originally anticipated?
Charlie Cannon - Chairman, CEO & President
Yes, I don't know that we're going to comment a lot on next year yet because there are a lot of factors other than Jetway that play on that. But I think we said in the first-quarter call that we were in really good shape in FoodTech and really liked our position and that has not changed as of this call. FoodTech is right on track with where we thought we would be earlier in the year.
On the AeroTech side we said it was critical that we inbound orders and in fact we inbounded over $100 million in the second quarter. And in the third quarter I think we are going to inbound even more than that. So we think even though we started out behind in AeroTech and we were not happy with the margins in the second quarter, we like the business perspective going forward in AeroTech in terms of volume. And as you know, we do get a little leverage on that volume typically in AeroTech.
Adam Peck - Analyst
And as previously mentioned, the balance sheet is in great shape. I think probably the best shape since the spin. But 2014 CapEx will most likely be lower, right, because Lakeland will be completed?
Ron Mambu - VP, CFO & Controller
Yes, Adam, Lakeland is being phased in over several years. So probably 2014 is not going to be much different than 2013. But I would expect 2015 then that we would see a difference.
Adam Peck - Analyst
Okay. Thanks, guys.
Operator
Thank you. There are no further questions. I would like to hand the call back over to Mr. Debarshi Sengupta for closing remarks.
Debarshi Sengupta - Director of IR & Financial Planning
Thank you, everyone, for joining us this morning. A replay of our call will be available on our IR website early this afternoon. If you have any further questions please give us a call. Have a good day.
Operator
Thank you. This does conclude today's conference call. You may now disconnect.