Jeff Scipta - Director, Financial Planning & Analysis Thomas Giacomini - President & CEO Brian Deck - EVP, Treasurer & CFO.

Larry De Maria - William Blair Christopher McGinnis - Sidoti & Company, LLC Walter Liptak - Seaport Global Securities LLC George Godfrey - C.L. King & Associates, Inc. David Stratton - Great Lakes Review.

Good morning and welcome to JBT Corporation's First Quarter 2017 Earnings Conference Call. My name is Carol 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 speaker's 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. Jeff Scipta to begin today's conference..

Thank you, Sally. Good morning, everyone and welcome to our first 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. Our Form 10-K also contains 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 within our earnings announcement and posted on our Investor Relations website. Now, I would like to turn the call over to Tom..

Thanks, Jeff. JBT got off to a strong start for 2017 to solid first quarter performance. FoodTech orders were robust and we are on track to achieve the operating income gains we projected for full year 2017. I will let Brian provide color on our first quarter performance and update our guidance for 2017.

Then I'll follow up with some details on the implementation of our elevate strategy and provide some further comments, Brian..

Thanks, Tom and good morning everyone. JBT's revenue increased 29% in the first quarter composed of 16% organic growth and 13% from acquisitions. This exceeded our expectations as we enjoyed strong shipments of protein equipment within FoodTech, and fixed equipment with an AeroTech.

Additionally, we saw some shipments that had originally been expected for Q2 moving into Q1. On a segment basis FoodTech posted revenue growth of 36% including 17% organic and 19% from acquisitions. AeroTech posted revenue growth of 14% all organic. JBT adjusted EBITDA improved 30% versus prior years adjusted EBITDA.

Segment operating profit increased 10% year-over-year but segment margins declined 150 basis points, primarily to the transaction and integration costs. As well as purchase price accounting associated with the three acquisitions.

specifically the acquisitions and the $34 million of revenue in Q1 2017, but no operating income contribution reducing overall segment margins by approximately 100 basis points. FoodTech segment margins were also impacted by a less rich equipment sales mix versus the year ago, particularly within our liquid foods business.

Similarly, as it relates to AeroTech we are stronger mix of shipments of fixed equipment, which tends to carry lower margins than mobile and military equipment. Inbound orders were ahead 18% versus the first quarter of 2016.

With a 43% increase of FoodTech more than offsetting a 29% the kind AeroTech; and the FoodTech site customer engagement remains solid. At AeroTech we have a clear line of sight on orders and remain confident in its full year performance. In total JBT backlog was up 4% from Q1 2016.

First quarter corporate expense was $9.2 million versus $10.4 million in the year ago period. The reduction was primarily related to lower variable compensation expense. For the year, we continue to expect corporate expense to be just under 3% of revenue versus 3.2% in 2016.

As discussed last quarter, JBT booked up discrete tax benefit, which totaled $5.58 million or $0.19 per share in the first quarter associated with new accounting tax growth on stock compensation. This was included and reported diluted earnings per share a 58%. In the first court of 2016 GAAP APS was 17% and adjusted EPS was $0.34.

Our tax rate excluding the discrete item was 30.8%. And we continue to expect a rate of 30% to 31% for the remainder of the year. Cash flow is strong in the first quarter. Cash flow from operations of $24 million compared of the $0.2 million in the prior year quarter.

This reflects seasonal accounts receivable collection, and inventory investment cycle coupled with strong customer deposits. We remain confident that 90% of our net income from continuing operations will convert the cash in 2017.

During the first quarter 2017 we completed a follow on equity offerings issuing $2.3 million shares with net proceeds of $184 million. Part of the offering our leverage as measured by our banks at about 3.2x. With the offering we reduced that leverage we're now at the lower end of our target range of 2x to 3x.

This provides JBT strong liquidity and the capacity to continue our disciplined acquisition program. The equity offering reduced our interest expense. Previously we guided the full year 2017 interest expense of $19 million to $20 million, the current guidance is approximately $14 million.

That is up from $9.4 million in 2016, due to the financing for the CAT, Tipper and Avure acquisitions. It also reflects our expectation of two additional fed rate increases during 2017 impacting our variable rate debt, which represent about 40% of total debt.

At the same time, the equity offering increased our share count resulting in modest dilution to EPS. We're now guiding to earnings per diluted share from continuing operations a $2.95 to $3.10 in 2017. On an operating income basis, we expect to achieve our full year prior guidance.

We have raised our full year revenue growth from forecast to 16%, reflecting a higher organic growth of 4% to 6% verses prior guidance 3% to 5%, with growth from completed acquisitions of 11%.

We are also adjusting our projected segment how pretty margin increased 25 to 50 basis points, compared with previous guidance of approximately 50 basis points. The 2017 guidance to - continues to include the discrete $0.19 tax benefit we enjoyed in Q1 and a headwind from the Avure accusation of about $0.05.

For the second quarter of 2017 we expect revenue of approximately $380 million and earnings from continuing operations of $0.50 per diluted share. This includes the previously mentioned impact from certain accelerated shipments into Q1, and the construct of a backlog, which is more weighted towards Q3.

Q2 segment operating margins are expected to increase over 100 basis points sequentially, this includes continued acquisition related items an unfavorable product mix similar to the first quarter 2017. Acquisitions will contribute approximately $45 million in revenue in Q2, with operating income margins of about 2%.

For the full year, we continue to expect acquisitions to collectively contribute $0.08 to $0.17 per share. To the Associated interest expense another acquisition costs they are expected to be dilutive in the first half and nicely accretive in the second half in line with our full year expectations.

Overall, for full year 2017, we expect earnings to be more back half loaded as mixed improves and the acquisition contribute more fully. The third quarter is expected to show solid improvement versus the second, followed by the typical seasonal increase from the third quarter to the fourth. With that I'll turn the call back to Tom..

Thanks, Brian. In early 2017 we begin implementing our elevate strategy; JBT's three-year framework to achieve annual revenue growth of 10% and annual EPS growth the 15%. We are managing elevate the same way we did our successful next level strategy with the discipline process.

For each of our initiatives JBT has established specific objectives and deliverables, with monthly summaries and detailed quarterly reviews of each initiative with the business champion. With good system JPT maintains accountability and insurance progress toward its goals.

One of the initiatives discussed as part of elevate is their strategic sourcing program. We see significant opportunity negotiates as one JBT and consolidate our purchases with fewer stronger suppliers yielding 2% to 3% of annualized savings by 2019, on approximately $600 million to spend.

In April, JBT hosts the supplier summit in Chicago for a select group of supply chain partners. Where 80 suppliers from the metals, electronics, MRO fabrications, power transmission, other business segments within our supply chain.

It's part of the summit cross functional teams from multiple JBT locations collaborate with suppliers and cover ways to minimize costs, lead times and working capital requirements. We also explored ways to reduce complexity in our products and business processes and to support new product development through early engineering engagement.

More than 150 unique value creation ideas were generated representing benefits JBT's total cost of ownership and the value proposition to our customer. JBT strategic sourcing team is in the process of pursuing these opportunities.

Overall, it is our intention for the strategic sourcing program to deliver improvements in our competitive position, margins and working capital. Switching gears, let me head to the progress that our [indiscernible] business, which provides automated guided vehicle systems. We're enjoying rapid growth and a strong order pipeline.

In the first quarter we booked a significant order from a leading high tech company. We are particularly excited about this order, which we see as the validation of our technology the market place, and enterprise selling strategy. Finally, I'll comment on a recent acquisition of Avure technology, which we completed the first quarter 2017.

I've had the chance to visit a customer since the acquisition and discuss Avure's high pressure processing technology known as HPP. We're seeing real interest in HPP which create opportunities for our customers to develop food products that addressed consumer demand for clear labels.

As we discussed today, we are pleased with the record orders in the FoodTech in the first quarter. And we're expecting strong AeroTech orders as we move forward the year.

For the remainder 2017, we have a second quarter were sequential margin improvement and remain confident we're progressing towards our year-end objectives, while continuing strength in the business for the long term. With that we'll open the call to your questions.

Operator?.

Thank you. [Operator Instructions] And your first question today comes from [indiscernible] from Wells Fargo. Please go ahead..

Hey guys, good morning. Just want to touch upon in the orders, is there - can you give us a little color help us understand the core orders trends in the quarter and a very strong impact but just trying to get those of the underlying trends for the quarter..

Yes, sure Alice.

Let me give you a little color, we usually like to talk through a little bit by geography and I tell you as we - as we look at it, it was a really strong order book, it was strong in record as we mentioned in both organically and for acquisitions very solid but if we look at the geographies in FoodTech in North America significantly improved for liquid foods were we had seen some weakness last year and remain strong for protein.

And Europe, the liquid foods activity was also strong and protein tapered been a bit, it wasn't that that project activity slowdown, we just didn't have as many orders show up as we would have expected the period, so we'll expect a convert some of those as we move forward in the year.

Asia was very strong for protein in particular, and continues to be strong and South America with some of the challenges we seen, particularly in Brazil was a little weaker than it was last year.

So altogether of the geographies are - are looking positive for us, South Americans not a large part of the business but we do expect to see that moderate through the year also..

Great. Going back to Europe, any concerns on that protein peep that business tapering there..

No, it was - it was order activity and we see the project and I think just some other things once again with all the election activity, we saw some of this when the U.K and Brexit was going on I suspect with France going through what we're seeing, that always affects our customers investment plans a bit, but seems like things are settling in a bit and we're comfortable confident that the project activity we have in front of us and the customer engagement that's going on, it's going to provide us year activity we need to get through the year and deliver our results as we see it today..

Great. And then just last question, how much in the orders when you were here that you booked in the quarter are to be shipped this year late and to 2018..

Yes. Particularly to FoodTech I would say essentially all of them would be shipped this year and then with AeroTech, the order book is a little bit longer but most of most of them still be shipped this year..

Great, thank you..

Your next question comes from Larry De Maria from William Blair. Please go ahead..

Thanks, good morning everybody.

I want to talk a little bit I guess the mix issue, why was there a [indiscernible] and does that have anything to do with pricing dynamics, or can you just flush out what's going on with mix a little bit more for us?.

Yes, Larry.

When we got into the year this is certainly in our thinking and what's happening is that we have these large equipment projects and particularly in liquid food, we had some particular high margin once last year that made difficult comparable and as we go forward and - we're seeing our project in order actively develop, we see and are gaining the confidence in the back half a year that our mix will become more favorable as some of the new projects that have higher margins will come in.

So from our perspective the sequence of the quarters is similar to what we expected and for us it's just about completing our order book is in executing well on that in the back half of the year..

So it has nothing to do in another words with the pricing dynamic in the industry, anything like that?.

No, we don't believe so. It was just, we can - when we look inside of it with some specific projects we had with customers that were particularly profitable in around some of our liquid foods technologies and we see some of that project actively developing for the back half of the year now as we move forward..

And then can you maybe just I don't know if you can give exact organic numbers but help us magnitude organic, working organic in FoodTech and relate to that what give you confidence that we will see a nice profitable recovering the second half of the mostly what you see in the order book or is there anything else going on as well..

Sure, it's a two part answer. The organic orders were very strong Larry, and we're very pleased with what happened there.

Secondly, when we see what's in the order book now in the projects that we have closer at hand that's what giving us the confidence as we look forward into Q2 sequential margin improvement, and then a significant step up in three and four, given what we have in front of us. So as we sit here today that as we mention our confidence is high on that..

Okay, thanks, I will jump back in queue..

Your next question comes from [indiscernible]. Please go ahead..

Yes sir, good morning guys. I'm going to - I'm going to try the same thing Allison and Larry here, I'm trying to figure out how to think about organic growth in FoodTech, these to be your broader company guidance, given the kind of order growth that we've seen in in the first quarter. Can you sort of help frame this for me..

Sure. As we indicated, we - and we raised our organic growth expectations for the full year. That's on the strength of the orders that we - we converted in the first quarter and what we see happening with customer activity.

And certainly FoodTech is important part of that and as I look forward Mig, we're just really encouraged by the activity we have with our customers, and the new products and the work we're doing in the marketplace all coming together, and as I mentioned when you look in the geographies with North America remaining strong, Asia which is a - it's a good growth engine for us continuing strength and Europe improving for liquid food there's just a lot of markers heading our way that give us the confidence to do that..

I see, maybe put differently if we're looking at your guidance 46% organic growth, the low end that basically implies sort of flattish organic growth over the next three quarters and I get - I get that it comps are varying.

I guess I'm just wondering is there any scenario that you can think of where organic growth would be flattish Q2 to Q4 for based on what you're saying in your food business..

What I would tell you that the with the way we look at the back of the last three quarters of the year it's in that 3%-ish growth range, we obviously out performed in Q1, we do tend to always look at a full year basis, so we do still see a decent growth that in that 3%-ish range in the back half and obviously the order book was a very strong in the first quarter and as the orders progress over the course of the year will continue to keep an eye on not what books and build on the course of the year..

Right, and the other thing that I would like to mention is we enter first quarterly with [indiscernible].

We got off to a great start and the indicators are positive and all I would say is that as you look at how typically our year develops make Q3 and Q4 quite large and as Brian and I go through this process, we're always sensitive to that and all the indicators are very positive in the right direction and we're just focused on executing against those large Q3 and Q4 as we move forward.

And as Brian mentioned, as we get further resolution through the year we'll make sure we provide appropriate updates, but at this point in the journey, we are very encouraged by the order activity they came in, we mention that we expect Aero to be strong with orders going forward also.

And so far from our perspective things are shaping up well and that's what gives us the confidence to raise that revenue guide, which a big part of that is you know is organic..

I see. Then if we can talk a little bit of margin to first I - I wanted to make sure that I clearly understand the puts and takes to Europe a slight adjustment to your overall margin guidance for the year.

And then also related to this can you talk a little bit about your costs, obviously we seen raw material cost move higher how does that flow to your [indiscernible]?.

Yes, so with regard to the margins, really we're looking at is the prior guidance was about 50 basis points in the midpoint of the guidance is 37.5 basis points. And that's getting the fuller visibility for the backlog is consuming Q1 and Q2.

So what the orders that have come in and we just have much better visibility on that - on that mix, so we've adjusted it appropriately. And I'm sorry what was the question with regards to material cost..

Yes, raw material cost compensation and whatever in terms inflation..

Yes, we've been talking through that and we have seen some pressure on steel although it's not a large portion of our cost picture, Mig, except with exception of our fixed equipment and we you know we certainly have tried to incorporate that thinking and our pricing in the protective and working with our customers, but I would tell you that; as we work our way through this our pricing or our customer value program, we obvious to look to make sure we recover that.

And then secondly as I mentioned and described on the call, we have a significant supply chain activity under way and that's going to bring back the JBT not just in the short term but in the mid to long term over this three year run away and this is the first time as a company we've really collectively gone to work on our purchases, try to align our supply chain, fewer stronger suppliers, better economic and helping us with our balance sheet in terms of helping with inventory and containment.

And then last, a big part of this we've mentioned the past, one of the issues that we have in the marketplace is because of this complex nature of our products we tend to have significant lead time, so by working more closely with better suppliers, we should better get our purchases in more quickly, which will help us be more competitive on our overall lead time.

So a significant amount of energy under way and supply chain, lots of opportunity going forward and from our perspective we still feel the calculus is more positive than negative given the inflationary pressures on cost..

Great, thank you guys..

Your next question comes from Christopher McGinnis from Sidoti & Company, please go ahead..

Good morning. I just want to focused maybe on the past acquisitions, now you have six over a year, old in terms of when they're acquired. I just want you to do again on terms of how the synergies are playing out in terms of more so on the revenue side, as you had a lot of time in those acquisitions to integrate them..

Yes, thanks, Chris for the question. We really are seeing the benefits, when we started this journey on M&A we felt there was a benefit to JBT having a broader and more complete product offering in our ability to take these regional customers - acquisitions and put them on the global stage and we are definitely seeing the benefits of that.

We can point to a number of orders we receive through our acquisitions that wouldn't have occurred if they had been standing alone and particularly in the global setting bringing those acquisitions in Asia, Latin America has been a significant tail win for them.

Acquisitions wise we worked very hard and then very strong way to integrate these quickly and we've spent behind that and we've gotten benefits from it.

You know, although we were maintained the brand names in the marketplace because they have equity, we are collectively selling those products out in the marketplace and in offering a much more comprehensive JBT capability.

So the liquid food serve because we did a little more earlier were strong there, some of the early protein acquisitions are also well integrated and then now we're knee deep in working away on the three that we have today, and we've dramatically improved our presence in protein, it was - it was very obvious when we went to the poultry explore this year how much more with significant player JBT is in the protein marketplace and poultry and we're very encouraged by that given the long term trends, when you read the newspapers and the magazines today with consumers becoming more and more sensitive to what the quality of the what they eat they are just really moving more protein.

And that's a great trend for JBT as we go forward given the acquisitions we've completed..

Great. And then secondly just following just to the recent secondary in, your thoughts around continued M&A opportunities in the space, thanks..

Yes, we continue to work our pipeline and develop our opportunities that as you know they're episodic but JBT has strengthened its balance sheet as Brian mentioned, and we're in a good position to act on our opportunities should they mature and were out both on the protein and liquid food side, developing and maturing our opportunities and are working as hard as it - as we have in the past.

So there is a lot of engagement the company going on there and we expect to continue to work at it..

Thanks for taking your time this morning..

Our next question comes from [indiscernible]. Please go ahead..

Hey guys how you doing. I just wonder like maybe a little more specific on what exactly you guys doing beyond the purchasing on the integration of acquisitions and are you discovering any real positives or negatives in terms of that the customers what the customers are seeing I guess your product lineup continues to strengthen.

And - but just having these new products in there is it really leading to kind of more momentum or is that going to take a little while..

Thanks, Joules [ph]. Little bit about our integration program, we do the planning well in advance of completion the acquisitions and we have a detailed plan by week initially then month in quarter as we move forward, and we hold ourselves accountable to that and there's a significant amount of activity under way.

On the three acquisitions for the integration, I would tell you that we are absolutely being benefits the JBT having a stronger collective offering, our customer awareness is increased that number of high level management meetings we're having is higher than we have in the past as we become a more important supplier, our ability to understand more strategically where our customers are heading and the benefits that are coming from that it has been real positive.

Although we have them historically a very broad and wide customer base, there have been a few pleasant surprises of customers that the acquisitions have brought us that JBT didn't have along or it may be a complete history with, so that's been a bit of a pleasant upside.

And then most recently as I mentioned on Avure which was a very interesting acquisition because of two reasons, one, it's a pretty much equal parts protein in liquid food.

And then secondly, because it is a technology that really enables these clean labels and extend fresh food that are an important part of the customer base, it's been really encouraging as we engage our traditional customers, in many ways what I've met with them and our key sales people that with the more technical people they've all as per download tell us about it HPP [ph] what could this mean to our business, how should we think about this.

Those are really interesting discussions and important ones for as we go forward because we do expect that to be a nice and - nicely growing company and expected to grow as we mentioned above market rates.

So from my perspective that was very encouraging validation of the reason we acquired Avure, altogether of the position that JBT in the marketplace, our virtue of our acquisition program and the work we done on new product in improving our sales and service organization has really elevated our important industry and the awareness around JBT and I am comfortable and confident that if we - we're going to continue to work at that and become an even more integral important part of the industry moving forward..

That's great, then - and then if the acquisition pipeline, I don't know if this is really the right way to ask it but you'll know what I'm asking after I finish.

Is it getting a little more crowded because it seems like you know you're kind of bumping up against the edges of other companies who are - who are in this sector and you like a middle bear something is moving in a couple of different directions and it seems like people are kind of starting, just starting to move into each other's territory, is that - are you seeing that in the market or not really yet..

Yes, so what I would tell you that the space is really broad and so there's - there's lots of opportunity, there's an attractive industry to many in and that we do see competition on all the deals, I would say private equity is particularly interested in the space based on that cash flow profile of the businesses.

But I would tell you based simply on the size of the breadth of the industry relative to our GDB plays I think there's plenty of opportunity for us to pick our spots where we think we can have the most valued our customer..

All right great, thank you so much..

Our next question comes from Walter Liptak from Seaport Global Securities LLC. Please go ahead..

Hi, good morning. What I wanted to see if we could just go down a little bit more into some of your comments about the M&A costs in this quarter and integration cost and how much flowed through, and then an estimate next quarter of how much is going to be flowing through and impact in that FoodTech business..

Yes so the way to think about it Walt, I mention that we have $34 million of revenue in the quarter, first quarter for the acquisitions in about $45 million in the second quarter. And I also mentioned the margins in Q1 we're basically 0% in about 2% in in the second quarter.

And then you got the interest expense impact as well, which basically makes these acquisitions dilutive in the first half.

But if you think about that $34 million in the first quarter and it is a zero margin than you would normally expect something in the 10% to 15% range there is a delta there that will hopefully flush out in the back half of the year.

So it's fairly impact well, because not only are not getting the positive impact you're basically getting all costs really depleting your what you otherwise would have been operating margin, so it's really it's set.

The integration cost, the inventory step up, and frankly that's what we focus on that full year guidance because it's really hard for everyone to see and we recognize that but if the quarters progress to get significantly more creative as the year goes on, as you get - takes about six months or so to get really get to all those acquisition related cost and I'll reiterate that we had forecasted originally 8% of 17% contribution for the year and we're still very confident on that..

Okay, that sounds great, so it sounds like the low end maybe $45 million and then maybe similar amount in the second quarter. You know, as you think about is that this last acquisitions, you kind of eluded to this in the other calls.

Are you saying growth from the acquisition faster than you expected when you did the deals, like we are in a market where - where your strategies plus the market growth are helping your organic growth from acquisitions or they come in as planned..

Yes, Walt, I would say that the most positive part of the acquisition program it's been how as we work collectively.

Our conversion rate it maybe the breathe of the orders we're seeing in our core business has definitely improved as a result of the acquisition, we know there are specific projects because we offer the stronger more collective offering, we're getting better orders and what I would describe their historic pace business.

As you can imagine it, you get six month or year 18 months in those numbers get harder to parse, but when I look into the specific projects we're working on, the customer engagement we're working - we're having as we look at our collective offering, I see better conversion also benefiting in our base business.

So I'd say it's a two part benefit and I would say that way they've helped are based businesses has been a pleasant surprise and probably better than what we would have initially expected coming out, and starting this acquisition program..

Okay, that sounds good. And then maybe a last one.

When they ask you to order book in FoodTech organically looked pretty strong to me this quarter, I wonder if any very large orders that came in, I know you said it is kind of broad based geographically but on a customer base are here any large customer orders that were lumping this quarter and helped that strong organic growth..

As we continue more orders Walter, some are large and some are less than $1 million but I'd say there wasn't anything extraordinary large or that was particularly outstanding, I would mention on AJ [ph] business we were pleased to get that order from a real leader in the high tech industry and one that really validated some of the improvements we've made in that business.

And then a liquid food side, we did have one nice order that in particular was encouraging to us because it's in front of a new beverage trend that a lot of consumers are excited about.

So the position in the orders was positive and was similar to the last - similar to what we have seen in prior quarters with two that were pretty strong but nothing of an outsized nature that would make things different or not comparable..

Okay, perfect. Thank you..

Our next question comes from George Godfrey from C.L. King. Please go ahead..

Thank you, thanks for taking my question. Just want to drill on the organic growth rate of the forecast of the year a little bit more. I realize you took it up from range of 3% to 5% to 4% to 6%.

And I hear what you said about the AeroTech quarters coming back a little bit stronger so the forward guidance would incorporate a 3% to 4% growth in AeroTech, is that correct..

Yes, it is in that 3% range for the back half of the year..

So if I look at the FoodTech, the organic revenue growth this quarter just for that segment, was that about 17%..

Yes, that is right..

So what I'm struggling with is the forecast of 4% to 6% for the full year if AeroTech is going to be free, we came in the Q1 with 17%, it just seems like - That seems overly conservative, I want to go back a little bit to the third quarter of 2016, and you forecast I believe was 7% correct me if my numbers are wrong a 7% full year organic growth and the number actually came in at 9% which is 2 percentage points to the pretty big difference.

So I am wondering if there's some type of element here that the organic growth in the back half of this year could be significantly higher than your forecasting..

Yes, what - what I would tell you when you look at the quarterly mix, so the first quarter is always the smallest in terms of dollars, so it a dollar impacting Q1 year-over-year that 17% growth is a much smaller impact on subsequent quarters, so the backup is really extraordinarily strong routed to the first half.

So I think a lot of it is just kind of the way it rolls out over the course of the year. And we mentioned the Q1 numbers - the Q1 two numbers relative to Q2 of last year will be relatively modest, but with really strong pick up in the back half.

Then as I said earlier, as we get more visibility in to our backlog in orders during the course of the year, will get better visibility.

You know, just keep in mind that it is always very lumpy business and sometimes we really struggle to know exactly when something's going to ship in the last half of the year, is going to January or not and that can change revenues by $10 million to $15 million which is 1% or 2%..

Okay. But I mean the orders look great, the rolling four quarter book to bill in FoodTech look outstanding, just everything would seem to point to a more robust growth environment but I trust where you work..

George, just following on Brian's comments I agree it's a - we got a couple of big quarters ahead and we're encouraged by the progress and from my perspective as we continue to see things develop will certainly look update everyone but as been mentioned we talk to a great start in the beginning of the year..

No question, thank you Brian, I appreciate you taking my questions..

Thank you..

Our next question comes from David Stratton with Great Lakes Review. Please go ahead..

I just want to make sure I'm understanding this correctly and that is for 2Q. you're forecasting EPS to be offer to around $0.50 per share and that is because of the acquisition dilution and related costs and step ups, am I understanding that correctly..

Yes, it is that along with the product mix. So there is a portion that is from the acquisition that is negatively contributing. Particularly in consider the interest expense from the money we spent over the last few years but not getting really any operating income.

Then there is an impact year-over-year in the product mix which Tom talked about earlier..

Alright, well, thank you. I just want to make sure I got that right.

And then secondly, we've talked about you're now in your target debt ratio range and we talked about M&A, is there anything on the CapEx side that is now changing that you're in that sweet spot as far as that goes where you might have some internal opportunities and maybe just that give us glimpse of what does your CapEx looks like going forward..

Sure. I wouldn't - I would say that the change in our leverage ratio hasn't changed our thoughts as relates to CapEx. We're going to still continue to spend what we think we get good IRRs and that really hasn't changed.

I would tell you that the rate that we would expect somewhere in the range of $45 million of CapEx for the year, which is a little bit under 3% of our revenues, that's generally the pace you should consider us to be yet normally on..

Alright, thank you..

Our next question comes from Larry De Maria from William Blair. Please go ahead..

Thanks, a follow up, stick with the second half outlook looks like we need to get to around 14% or so segment margins to get to the EPS guide and you never been there before, so I guess can you just talk about the puts and takes to get there and did that become the new run rate it kind of want to see if that the stretch margin targets or if you feel like that obviously clearly doable..

Yes, so you're right that's about right on the - on the second margins the back half, and what I would tell you again and it really does reflect the backlog makes that we see coming through obviously we book really strong in this - in the second - in the first quarter here, we do continue to get some benefits from our restructuring programs or what not that we'd get really nice operating leverage as we grow in the second half.

So big part of it is just to benefit the operating leverage, just some efficiencies we've gotten as well as just the mix of the order book is going to shrink in the second half..

And then the third leg that comes in is the acquisition Larry, as we mentioned you know the acquisitions we done where strong on margins.

And we expect as we get through all the one-time items in the purchase accounting in the integration expenses as Brian outlined for you earlier, Q3 they started to kick in a material way and in Q$ we start to see the full benefit of the margins coming through from the acquisitions.

Now you look forward to next year out with his volumes come down and we scale our way through that will have to talk our way through it in next year but as you know JBT has weaker first half in the second half, so you should always expect margins unless something changes that are normal mode in the second half a year to be stronger than the first half..

Okay, makes sense. And then last thing become large M&A deal in protein I guess Tyson comes to mind, how do you think that those deals as it relates to JBT strategically as we see maybe more consolidation, is that an opportunity to get bigger with big customers or that more of a concern as maybe that announce power steps to those larger companies..

No, I would say on balance sheet the consolidation that's happening with our customers is a positive for JBT given our global position.

Our ability to serve those customers around the world and the strength of our relationship, so we're positive on the consolidation assuming it makes sense for the industry, and that we believe the positions us better as we continue to build our franchise out, Larry..

Okay, thanks..

Thank you..

[Operator Instructions] There are no further questions. Thank you. At this time, I would like to turn the call back to Mister Tom took me for closing remarks..

Thank you. As we discussed, our first quarter was a strong start for the year and puts us on track to achieve our forecasted mid-teens revenue, and high-teens for 2017. Thank you all for joining us on the call this morning..

This concludes today's conference call. You may now disconnect..