Good morning, and welcome to JBT Corporation's fourth quarter and full year 2021 earnings conference call. My name is Cheryl 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. I will now turn the call over to JBT's Vice President of Corporate Development and Investor Relations, Kedric Meredith, to begin today's conference. Thank you, Cheryl. Good morning, everyone, and welcome to our fourth quarter and full year 2021 conference call. With me on the call is our Chief Executive Officer, Brian Deck, and Chief Financial Officer, Matthew Meister. In today's call, we will use forward-looking statements that are subject to the safe harbor language in yesterday's press release and 8-K filing. JBT's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available in the investor relations section of our website. Also, our discussion today includes references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure can be found in the investor relations section of our website. Now I'll turn the call over to Brian. Thanks, Kedric, and good morning, everyone. In the fourth quarter and throughout 2021, JBT capitalized on our favorable market position to generate outstanding growth in orders. At FoodTech, our diversified portfolio, healthy underlying market demand, and the value that our solutions provide customers in terms of enhanced output, yield, labor-saving automation, and environmental sustainability drove exceptional order strength. Moreover, our new product introductions have been well-received and are contributing to outperformance on the demand front. At AeroTech, we see solid and improving demand environment and are well-positioned with market-leading products. Airline orders are continuing their measured recovery while the infrastructure and cargo segments remain strong. We also believe the Infrastructure Investment and Jobs Act signed into law in the fourth quarter will support continued airport investment over the next several years. On the other hand, the unprecedented challenges we've talked about through most of 2021 associated with supply chain disruptions, high inflation, and labor availability were even more challenging than we guided for. As a result, JBT's financial performance fell short of our expectations for the quarter and the year. In terms of inflation, while JBT has implemented various price increases to offset rising input costs, the inflation we are experiencing is persistent. We will continue to work through previously priced backlogs through the first half of 2022, particularly for fixed equipment at AeroTech. In terms of the material availability, conditions worsened for JBT in Q4 in a few categories, particularly related to electronics and hydraulics. On the labor front, conditions were tighter in the fourth quarter as well. Entering 2022, it became even more challenging with a very tight labor market and absenteeism associated with Omicron, which affects us and our vendor base, further stressing the supply chain. Given all this, we're maintaining modest margin expectations in 2022. Yet, as we look ahead with JBT's record orders, healthy backlogs, and continued strong commercial pipeline entering 2022, we're optimistic about generating mid- to high-teens revenue growth and improving margins as the year progresses off the expected low in the first quarter. Given our well-positioned portfolio solutions and the continued robust demand environment, combined with the future benefits of a digital transformation, we're excited about the prospects beyond 2022. I'll turn the call over to Matthew, who will provide an analysis of our 2021 results and our outlook for 2022. Thank you, Brian. For full year 2021, JBT generated high single-digit top-line growth of more than 8%. At the same time, external challenges took a greater toll than anticipated in the fourth quarter, which is reflected in the full year shortfall. The most significant impact was on productivity, where component and labor shortages forced us to stop and restart production as we waited for materials to be delivered, increasing the cost of manufacturing. In addition, customer access and travel restrictions continued to play a role in delaying some installations. FoodTech posted double-digit revenue growth of more than 13% in 2021, composed of 9% organic, 2.5% from acquisitions, and 2% from foreign exchange translation. EBIT margins for the year were 13.4% and adjusted EBITDA margins were 18.4%, both slightly below our guidance range. At AeroTech, full year revenue declined approximately 5%, with EBIT margins of 7% and adjusted EBITDA margins of 7.9%. In the fourth quarter, we continued to have difficulty getting equipment out the door at AeroTech's two primary manufacturing locations. Corporate costs, interest expense, and the tax rate, excluding discrete items, were all slightly better than expected. With that, we posted GAAP earnings per share of $3.69, up from prior year earnings of $3.39 per share. Adjusted EPS was $4.03 compared with $3.94. GAAP earnings per share in the fourth quarter of 2021 benefited from a $4.6 million deferred tax liability remeasurement, a benefit deducted from the calculation of adjusted earnings. Full year free cash flow exceeded expectations at $190 million, representing a conversion rate of 161%. This outperformance was largely driven by advanced customer payments on extremely strong FoodTech orders. Even without those deposits, free cash flow conversion was about 115% for the year, demonstrating the organization's proactive management of working capital. Speaking of orders, full year orders at FoodTech increased 29% with record fourth quarter orders of $455 million, far exceeding expectations. AeroTech orders were up 16% for the full year 2021, representing continued recovery of its end markets. Due to the outstanding order trends, we ended the year with record backlog of $1 billion, an indication of JBT's momentum entering 2022. However, given the uncertainty associated with the current macro environment and the impact that parts and labor availability challenges have had on our business units, we are not providing full earnings guidance at this time. We will provide some high-level assumptions for the year and first quarter to help with modeling. Starting with the top line. With our record backlog and ongoing strength of recurring revenue, we anticipate extremely robust full year 2022 revenue growth in the mid- to high teens. At FoodTech, that includes organic growth of 12%-15%, with another 3% from acquisitions. We expect AeroTech to grow at a slightly higher rate of 15%-20% as we ship some delayed backlog and our customers continue to ramp up their activity. We expect the previously mentioned macro challenges and continued inflation pressure will continue to constrain margin improvement, especially in the first half of 2022. As those challenges begin to subside and incremental pricing actions implemented in the second half of 2021 and early 2022 flow through the P&L, we believe margins will improve sequentially for both FoodTech and AeroTech as we move through the year. For the full year, we expect FoodTech EBITDA margins to be up about 75 to 100 basis points with stronger improvement at AeroTech. Corporate costs will be higher in 2022 due to rising labor costs, a return to a normalized level of incentive compensation, and a significant investment of approximately $14 million-$15 million to accelerate our digital strategy, which by itself translates to a headwind of about $0.35 per share. The tax rate for the year is expected to be between 23%-24% with interest expense of approximately $10 million. CapEx will be between $90 million-$95 million, which includes about $45 million of capitalized investment in our digital strategy. Total depreciation and amortization will be about $85 million-$90 million. Free cash flow conversion will be below 100% due to the higher capital expenditures and investment in working capital to support strong revenue growth. For the first quarter of 2022, labor availability issues have intensified for both JBT and our suppliers with the spread of the Omicron variant, limiting output and hurting our productivity on the shop floor. As a result, we expect total JBT revenue to decline at a low double-digit rate compared to the fourth quarter of 2021. Consolidated segment margins are expected to contract sequentially, while corporate costs will increase by about $3 million, primarily due to higher incentive compensation and costs associated with our digital investment. On a segment basis, we expect FoodTech revenue to be down in the high single digits% sequentially with lower margin due to the inefficiencies, as previously mentioned. At AeroTech, while we expect sequential revenue to decline in the high teens%, margins should improve slightly. We will continue to refine our outlook and provide more information on expectations for 2022 as the year progresses, particularly on margins. Finally, in the fourth quarter, we successfully completed the renewal of our credit facility, which we upsized by 30% to $1.3 billion. We also negotiated changes in the terms that increase our capacity, liquidity, and flexibility to pursue M&A and other strategic investment opportunities. Now let me turn the call back to Brian. Thanks, Matthew. During the fourth quarter, JBT acquired Urtasun, a provider of fruit and vegetable processing solutions. Urtasun expands and complements our offering in a very attractive and growing end market. We are particularly excited about the opportunity to leverage JBT's global presence and expand Urtasun's geographic reach beyond its current focus on Southern Europe. Additionally, we can capture cross-selling opportunities that leverage our great freezing franchise, which sits immediately adjacent to Urtasun's product line. Looking ahead, our M&A pipeline remains active with attractive opportunities that complement JBT's portfolio, enhance our automation capabilities, and position JBT even closer to customers' day-to-day operations. As Matthew mentioned, we have the financial capacity to be active in the market, while of course remaining committed to our disciplined approach to assessing strategic fit and creating shareholder value. Let me switch gears and provide some color on demand trends by geography and end market. FoodTech orders in the fourth quarter, which frankly blew away expectations and any prior record, were propelled by customers' need for capacity and labor-saving automation. We enjoyed strength in orders from the poultry, red meat, fruit, plant-based proteins, tray seal packaging, and the pharmaceutical and nutraceutical markets. We captured tremendous order expansion at our automated guided vehicle business, otherwise known as AGV, which is at the center of warehouse automation. Geographically, other than continued lengthy order cycles in Asia, we're experiencing across-the-board strength led by activity in the U.S. We are pleased to announce that we have set a date and agenda for JBT's 2022 Investor Day, which will be held on March 24th in New York City. At that time, we will introduce our Elevate 2.0 strategy, including details of our digital transformation. By creating an integrated digital platform that provides full lifecycle support, we can enhance the customer engagement. Specifically, we can unlock the benefits of system connectivity well beyond our current iOPS capability to monitor performance and provide preventative maintenance, further optimizing customers' production uptime, yield, food quality, and safety. We're also building a new user interface, integrating digital equipment drawings in a streamlined e-commerce platform. Together, this will provide a seamless parts and service ordering system, allowing JBT to capture a larger wallet share of customer care spend while providing incremental value to the customer's bottom line. We will also detail JBT's innovative automation solutions, lay out our multiyear framework for growth and profitability, and provide perspective on our portfolio strategy. Finally, I'd like to speak about our social and sustainability initiatives. JBT plans to issue our first ESG report in the first half of 2022. This report will highlight how JBT supports our customers' sustainability journey with solutions that reduce water usage, energy consumption, food waste, as well as enhanced food safety. Together with our customers, we're striving to make better use of the world's precious resources. The report also speaks to our equity and inclusion initiatives that make JBT a great place to work. Before we open the call to questions, I'd like to extend my most sincere thanks to all our employees at JBT and partners around the world. Through this extremely challenging macro environment, our people have taken extraordinary steps to support and deliver for our customers. With that, I'll take your questions. Operator? At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Mike M cGinn of Wells Fargo. Please go ahead, your line is open. Hey, good morning, everybody. Morning, Mike. I wanted to touch on, I guess, the guidance and the confidence in the back half outlook. If I'm looking at the financials and going back to the quarterly filings you had last quarter, you know, you alluded to some start-stop nature of production, but you haven't really built a lot of finished goods inventories, and inventory stepped up again this quarter, but not as much, you know, I guess as what you would expect in this high-growth environment. You know, understanding that, do you have the product or the, you know, in hand, or is there stuff waiting to be shipped? Maybe give us a sense of what's waiting to be shipped within the quarter that drove the miss versus, you know, what hasn't been built yet and, you know, is at risk for, you know, the second half of 2022 guidance. Sure, absolutely. The equipment in terms of both the fourth quarter miss and as our expectations for the first quarter has largely been built, and it would sit in either work in process or on our balance sheet, in a separate line item, for our in-process accounting. There is a lot of equipment that is 90% built, and as we go through the year, we're gonna see the same challenges of mostly built equipment, with the challenge in particular being the electronic components. That's the big issue, as we wait for a final assembly of certain parts. We do have to put that equipment aside, wait for those final parts to come in, and then allows us to ship. It's one of those issues with the lowest common denominator, where you have to have the electronics in order to complete the control panels and the other electronic components and functionality within the equipment. It's not so much an issue of major parts missing. We're doing a pretty good job acquiring all the things we need, but the electronic components issue is the biggest open item. We do expect that to abate somewhat in the back half. More than anything, what we've done in terms of the color that we've given for the year is, given the backlog, we would normally have about 65% in the bag, so to speak, with a 35% go get. As we sit here today, given the color that we've given on revenues, that's more like 75%-80% in the bag. We've tried to be really conservative as it relates to what we can actually get out the door, given those constraints. Certainly, if everything improves significantly, we actually see upside on that revenue number. Given the constraints that we're living in, we do feel confident in our ability to deliver what we put in front of the group. Okay, great. I just wanna switch gears to the digital investments you're making. Can you talk about some of the drivers for you know, putting this in place now? You know, kind of what does this do for your recurring revenue as a percentage of total sales, kind of the margin differential that you expect to pick up between you know, the aftermarket, the OEM business? Is this something that you're gonna be leaning on an internal kind of maintenance network, or is this gonna be outsourced to a third-party kind of asset-light model that maybe a contractor that's already doing the work? Any color there would be helpful. Sure. A lot to unpack there in that question. First and foremost, what we've seen over the last two years, particularly driven by COVID, is our customers' more and more willingness to engage deeper on the digital front, as cultures have changed, as people have gotten more religion about productivity and information. Frankly, if you talk about with our most sophisticated customers, they're really interested in data. They're interested in digital, AI, sustainability, automation, and all these things can be readily addressed by a digital platform that we have. We continue to see that demand. Frankly, as we built this product out, as we're building this product out, we're actually not doing it in a lab, so to speak, and just handing it out to our customers. We're doing it hand-in-hand with several key customers, and iterating back and forth as to what's important to them. We made some shifts along the way. What we thought was important to them has shifted to something that we found even more important as relates to food safety, the data on the cleanliness ability of the equipment, the throughput, the yield, the connectivity of the various pieces of equipment. We've really seen an enhanced engagement and willingness from our customers to really capture this information and data, and more importantly, allowing JBT to be an easier company to do business with. This is why we've added the e-commerce to as to go along with the preventative and predictive maintenance, and the parts packages. Ability for them to on-the-fly automatically order things from us, where in the past you'd have to pull out the PDF manuals, look at it, put in a phone call or an email. Now that's gonna be all digital, allowing you to double-click all the way through the equipment, into the actual parts on the machine itself, and then right then and there, either put forth a purchase order or go ahead and order a part by credit card. That's really exciting to us in terms of, again, making it easy to do business with, but also providing them more visibility on their data and enhancing their uptime and yield. We can demonstrate that increased uptime and the impact on their bottom line. That's what's pretty exciting about the value proposition to us and our customer. In terms of the way we're going about the execution on it, we do have partners that are helping us out in 2022 to put on a project basis. Thereafter, we would expect it to be fully insourced in terms of how, you know, we manage the product going forward. In 2022, we're using partners to help set this up. It's a big blitz of investment in 2022 with attractive ROIC on the project itself. We'll start to see the benefits in 2023, and then continue to ramp up 2024, 2025. We'll get some more specifics to you in Investor Day, but we're looking at attractive ROICs just on the uplift of the aftermarket parts and service, when you think about our wallet share, which depending on the product line, is anywhere from 20%-40% of wallet share by product. Lots of opportunity for upside that justifies the investment in itself, let alone any benefits that we see on having a more connected offering with our customers. They start to see the benefit of working with a larger company like JBT that can provide that not only the full line capabilities, but also the visibility to how those pieces are interconnected and working. It's a very exciting opportunity. We're looking forward to it. You know, just as a reminder, when you think about JBT and all this equipment that we're putting out in the field, in 2021, 2022, and in all likelihood, given the commercial strength, 2023, all that adds to the aftermarket baseline, the installed base that's out there. As a reminder, for each piece of equipment that we put out there, the life cycle of that piece of equipment results in usually two to four times the amount of the equipment investment in aftermarket parts and service. We're really excited about, one, just getting this installed base increased, but then also putting this great platform in place for us to be able to continue to monetize and do better for our customers as we go from here. Just to put a bow on this conversation and make sure I understand it, you already had the in-plant remote monitoring with your most sophisticated customers, and you're considering this as additional opportunity to add on to that and with the aftermarket procurement to kinda drive that higher or, you know, aftermarket TAM is what you're alluding to, correct? Essentially, yes. I would say even for our current iOPS program, which is our IoT solution, brings another level of sophistication to it, in terms of the user interface and the usability of that data and the information, and allows that information to be coordinated across multiple pieces of equipment and aligned as well. It does take our current iOPS offering to the next level and then adds those other components that you mentioned. Got it. I appreciate the time. Sure. Your next question is from Lawrence DeMaria of William Blair. Please go ahead, your line is open. Hi, thanks. Good morning. Hey, Lawrence. Hey, Brian. As it relates to that discussion, have we fundamentally changed your profit pull-through expectations? Are we entering a period of higher costs because of these investments? Do they trail off, and we can get back to more normal incrementals? Secondly, obviously there's no EPS guides, but can you maybe just give us a little color around the Cadence first half versus second half? Could it be, like, 30/70? Is it that much of a jump? Thanks. Sure. Yeah, in terms of the incrementals and changing the business model, not so much, but other than 2021 with some pretty meaningful fixed investments that we see that will benefit from there. There will be some ongoing investment as part of maintaining the system and all that, but we consider that part of the general operating costs within that. I would say historical contribution margins on aftermarket parts and services, which are north of 30% historically. Which should be able to capture within that contribution margin the ongoing maintenance costs and people and supply chain developments that we need. I don't see the model changing meaningfully once we get past these investments in 2021. In terms of Cadence, Lawrence, it's Matthew. I would say, you know, certainly in Q1, that's sort of that is definitely the low point in terms of both revenue and margins for both the FoodTech business and the AeroTech business. We do expect margins to certainly improve starting in Q2 for FoodTech and the mobile equipment part of the AeroTech business. We expect a ramping back to a more normalized incremental margins by sort of the second half of the year. It'll be challenged certainly in the first quarter. It'll be better in Q2 and certainly back to more normalized levels as we get into Q3. For the fixed equipment part of the AeroTech business, those incremental margins will remain significantly off the historical rates through Q2. As we've talked about in previous conversations, the backlog is got a longer lead time and delivery window than our other parts of our business. It'll take us a little longer to work through some of the previously priced backlog that we currently have. Okay. We're seeing more. Yeah. Sorry. Go ahead, Lawrence. I was gonna say, second half run rate is a more normalized run rate after the kind of the first half. Absolutely. In fact, Q1's gonna be a tough quarter, Lawrence, particularly because of the January labor situation. Just to give you some color on Omicron and the impact on JBT, if you look at the cumulative. We track our COVID cases. If you look at the cumulative cases over the last two years, 30% of them occurred in the month of January. That's how impactful Omicron was. We were looking at really significant absentee rates all through January on top of the open positions we already had because of the tight labor market. January was a really difficult month, and you can't get those hours back, right? That makes for a really tough Q1, which is what we try to give you the heads-up, obviously, with the color we've provided that it's gonna be tough first quarter, but then it progressively gets better from there as Matthew laid out. Particularly the back half looks pretty solid in that regard. By the way, just to correct something I said a moment ago, I kept referring to 2021 as our investments but really went 2022 for those one-time investments. Right. Can I just have one more follow-up, if I may? You know, obviously the lead time is getting extended, as we're referencing now. Is there any risk to either, A, losing orders that you have in the backlog, or B, not getting the jumbo orders 'cause they go to somebody else that can deliver, or is this just so pervasive in the industry? On the first part, not so much, right? I think, you know, people recognize the challenges that the world has with regard to lead times and, frankly, if anything, they're making sure they get in the queue. I do think we always continue to monitor where we see lead times with our competition, and I would say we're there, too, still slightly better. We are seeing, for example, on ovens and freezers, lead times from some of our competition well beyond a year at this point. We're still within a year. I do feel that we are still competitive in that regard, even with the elongated lead times. That said, it's a risk, right? At some point, do customers say, you know, when it gets beyond a year, do they make those investments? That would be my one concern. The fact is the commercial pipeline that we're working under is very, very strong. Even with the huge conversion in the fourth quarter that we saw, the general pipeline is quite strong. The demand is strong at the consumer level for... You know, go to the grocery store, you see the empty shelves, et cetera. The demand is still there. Our customers need the automation. They've got the same labor problems. The general environment is good. We see that continuing through 2022. I think the good news is when you think about what I mentioned earlier about the strength of the backlog and of the book-to-bill, the small book-to-bill that we need, it does look like we're gonna have a solid backlog as we go through the year as well. Thank you. Your next question comes from Mircea Dobre of Baird. Please go ahead. Your line is open. Good morning, everyone. Good morning. Just wanted to start with a quick clarification. In the press release on your 2022 outlook, you're talking about margins to be slightly above 2021 levels. I wanna make sure that we're clear. Are you talking about segment-level margins, or does this include the incremental investments on the corporate line item as well? It would include total JBT adjusted EBITDA margins. They will be slightly better than 2021. Right. Okay. Even more so at the segment level. Right because of the investments. Correct. Thank you for that. A couple of questions on FoodTech for me. You know, if I'm looking at how you're talking about Q1 revenues and then put that in the context of the full year guidance, right? 12%-15% organic growth. I mean, we're obviously starting very slow. Yep Doing much better. I'm kind of curious if you can comment on the Cadence here. How do you see the second quarter play out? You know, can we actually see north of $400 million of revenue in the second quarter? I ask because demand doesn't seem to be the problem here, right? It's all about how you're able to kind of turn product out of the factories. I understand Omicron, that's an issue that's essentially going away. But do you sort of get the sense that you have enough visibility in terms of electronic component availability, any adjustments that your supply chain teams or purchasing teams might be making in order to kind of give us some confidence that the full year organic growth outlook is attainable? Yeah, I think it's Matthew. I would say first, I think it's appropriate for us to be a little cautious in the current environment that we're in. Certainly, for FoodTech, we do expect revenue to be north of $400 million in Q2 and continuing to ramp from there as we get into the second half. Right. As we talked about this, the component availability is an issue, right? It is hand-to-hand combat every day that we work with our suppliers. We're ordering as early as we possibly can, and that's why we're feeling confident about the timing. We certainly tried to make sure we took that timing into consideration when we put together the forecast and the color. You know, we can't tell the future obviously, but given what we see here today and the strength of that backlog, you know, one way or another. It may not be the same things. You know, we might expect product A to ship, instead it ends up being product B, which we would've thought went later, right? It's gonna be a little bit of mixing and matching depending on where we get the components. Given the strength of the backlog and the diversified nature of our overall network for JBT and the diversified product lines that we have, we do feel confident that somewhere, somehow, we're gonna get stuff out the door. Then again, if things alleviate, that could provide some upside on the revenue. Frankly, I mean, we're as busy as can be in our factories for sure. Okay. I guess my follow-up is just on the way you're pricing this product. You know, I remember prior discussions that we've had here on the topic and, you know, you talked about the fact that oftentimes the pricing is sort of negotiated at the point of purchase. It's not list price, right? You know, these are bigger machines, they're kind of negotiated at the point- Right of purchase. Right. There are escalators associated with that. To be candid, we're not quite seeing that play through in the near term margins, so I'm wondering what's kind of different here, other than Omicron, which you talked about. As we're sort of thinking about the, you know, orders that you'd be taking, say, in Q1 of 2022, are those at this point priced to the point where you can reach price cost neutrality or better as you contemplate the back half of 2022? Thank you. Sure. I'll answer first then I'll have Matthew give some price cost conversation. I would say for FoodTech, we've largely been able to capture the inflation, I would say, kind of on a one quarter lag basis. The problem is every single quarter we continue to see. You're kind of always trying to catch up, and you're always about a quarter lag on some of the inflation. But the bigger impact for FoodTech, it's not so much the price cost on the material input, and we'll have Matthew talk about that. It is the productivity and the logistics, right? That's hard to price for, you know, six months in advance, right? When you're taking the order even nine months in advance. We have not been passing that along, so to speak. We haven't seen the market doing that either, so we do have good feel for the competition and where the price points are. There is competitive pressure obviously. We are largely trying to price for price cost issues, but understanding some of these inefficiencies at the plant level and on the logistics side, we are effectively have been bearing the cost. That's really what you saw in Q4, as well as you'll see in Q1. Yeah. Mircea Dobre, just to provide a little more detail around price cost. I mean, for FoodTech, you know, for the full year, we expect to be favorable throughout the year, but certainly at best flat in the first quarter. As we've taken consistent price increases in the second half of 2021, and even in the first part of 2022, we should expect to see those prices take hold in the second quarter and be favorable from a price cost perspective, at least on input costs. On the AeroTech side, it's a little bit different and it's sort of split between the businesses. Overall, I'd say for AeroTech, we're expecting to be essentially flat on a price cost perspective. Certainly unfavorable in the first half from the previously priced backlog, especially in fixed equipment. As that ships to customers, we should see meaningful improvement in the price cost ratio in the second half of the year. Right. Just to remind everybody, we have two large businesses in AeroTech on the fixed and on the mobile and the fixed side. These are construction like contracts that we took, you know, a year ago. We do our best to lock up the metal prices and have some escalator clauses, but these are a lot of times public bids were really difficult. In most, you know, 95% of the environments, there's not really an issue. You do have some fluctuations. We try to build in some fluff for metal cost fluctuations. In the environment that we saw where metal essentially tripled there for a while, that made it really, really tough and we did not properly hedge the tail risk, so to speak. That's gonna continue to impact us on those fixed airport investments through the first half, as Matthew said. On the ground support side, there's more pricing as you go, but there are also large contracts with some of the major customers on the airline side as well as on the cargo side. We do tend to renegotiate those every year. Those negotiations have occurred and are occurring, and again, we would expect those new pricing arrangements to kick in here during the second quarter, and again, for the benefit of the third and fourth quarter. Okay. Appreciate the color. Thank you. Yeah. Your next question comes from Walter Liptak of Seaport Research. Please go ahead. Your line is open. Hey, Walter. Apologies. Your next question is from Steve Tusa of JP Morgan. Please go ahead. Your line is open. Hey guys. Good morning. Morning, Steve. Can you just talk about like the cash dynamics around kind of the front end of the op? Like when you take the order, you know, I assume you're getting some sort of a down payment 'cause it's a bit of a, you know, a project for a lot of these guys. On the back end when you're kind of ordering these components, specifically what I'm thinking about is kind of on the electronic side, some of the more kind of automation related embedded components that you may be buying. Is there a down payment for that? You mentioned you were kind of trying to order this stuff early, and so I'm curious, A, is there a down payment for that stuff, and B, kind of how early are you ordering this stuff versus, you know, what you would normally do, if things weren't this crazy? Sure, Steve. It's Matthew. On the order side, on a customer order side, we definitely are getting advanced deposits. It's usually in the 25%-30%, at the time we take the order to- For FoodTech. For FoodTech to Yep To secure the position in the manufacturing and for us to be able to start the engineering and start ordering the material. As we go through the process of production, we'll get other potential payments along the way, depending on the contract. On the AeroTech side, it's certainly less. There's a little bit on the fixed equipment side, but it's certainly on a lower percentage of orders that we get those deposits upfront. On the purchasing side, I'd say especially for high valued components, there are instances where we are putting deposits down ahead of time in order to secure spots and secure supply, but it's not to the same level that we get deposits on the customer side. Right. What are those? Are those some of the more complex kind of, you know, bigger ticket assemblies or? I'm really kind of thinking about like where the bottleneck would be maybe on the electronic side, like some of the automation guys have talked about, you know, not being able to ship and they put out some really big orders. I'm just trying to kind of triangulate around that as well to understand, you know, the cash moving around in your on your statements and kind of in your ecosystem, if you will. Yeah, certainly on electronic components like controls, and capacitors and things like that, we are struggling to really get those in. We are trying to secure slots for those particular manufacturing components. That's probably the biggest one that we're experiencing. Those are the biggest ones. Right. We're shifting. I don't know that we had a tremendous amount of deposits prior to all this, we're trying to shift some more so that we can try to secure more. We are ordering earlier for sure in order to do that. The challenge is we are kind of a high mix, low volume environment. Right. So we're- Right We're talking about, you know, we're not buying 10,000 of the same thing. We're buying 100 or 200 of something, and then we're accepting partial shipments. Hey, I can send you 25 now, or I can send you another 25. We're literally kind of waiting at the door for the next one to come in often. And then more generally, looking at the cash flow forecast for the year, we do expect to see some investments in the balance sheet in the front half of the year and more cash flow positive in the back half of the year, given what we just talked about where we obviously got a lot of cash flow from our customers in the fourth quarter and throughout 2021. Now we expect to have to invest in inventory and then obviously as that converts to receivables. We are trying to buy as much inventory honestly as we can in order to secure the shipments in the back half of the year in particular. With that. Sorry, just wanted to follow up because I think it's super interesting, 'cause you guys seem to have a very visible front end backlog, like, right? If they're giving you a 25%-30% down payment, they're not gonna come back and cancel, and they can't like, you know double order or pull forward, you know, something. On the back end, you guys do have the kind of ability to, you know, order a bit earlier. When you say you're ordering earlier, is that usually like still within the quarter, or is it, you know, hey, we would have ordered two months in advance, before all this happened, now we're ordering four months in advance? Any idea of like, you know- It's like the- The magnitude of kind of what means ordering early? What does that actually mean? Yeah. I guess. It would be an extra, you know, couple months earlier if we can at least, right? Historically, because you're trying to manage your inventory. Yep You know, your investment and your inventory turns, you would order as the lead times would suggest from your vendor. If it's a 45-day lead time, you're ordering, you know, 50 days beforehand with the expectation of getting it on time. Now with lead times, we see lead times six, nine, 12 months right now on electronics. The moment we take an order from a customer, we get through the engineering drawings, and sometimes before we get through the engineering drawings, we're ordering equipment, the parts just because we generally know what we're gonna need. Historically, at the earliest we would order once we get through the engineering drawings so we knew all the specs. Even now with, particularly with more, I'll call it standard to the extent that we call it that, we're ordering as soon as we can. That's what we're doing now in order to secure those positions, as we go through the year. Sorry, one more quick one on this. Do you sense your customers are doing the same thing? I mean, my guess is they have like they're more kind of real time demand based. Maybe they're kind of converting quicker saying, you know, "Hey, we have this project. Let's take a quick look. Okay, we can do it, so, like, let's get in the queue with these guys." I mean, do you see that from your customers at all? There is certainly a bit of a sense of urgency from our customers to get into the queue knowing the lead times are long and knowing that they've got the volume needs for sure, right? Right. The good news is we still have this great underlying commercial opportunity set that hasn't even converted to the backlog. The good news is the demand is still kind of seems to be ongoing despite kind of what could have been maybe some acceleration the last quarter or two. Then going back to what you said before and kind of back to Mircea's question, I think it was, you know, customers don't cancel, right? Mainly because like as you suggest, they lose those deposits, right? That's how our contracts are written. In fact, they would, you know, likely owe us for the amount of work that's done to date. That's generally how our contracts are written. It's quite punitive. We very rarely ever, if ever, see contract cancellations on the customer side. Yeah. Great color and best of luck kind of operating through this crazy environment. Thanks a lot for all the color. Thank you. Appreciate it. Thanks, Steve. Your next question is from Walter Liptak of Seaport Research. Please go ahead. Hey, Walt. Your line is open. Hi. Okay, thanks guys. Yeah, same thing here, you know, good luck working through the supply chain issues. You know, I wanted to ask the same question kind of in this way. You know, it seemed like, you know, supply chain was hitting you guys in AeroTech more than FoodTech in, you know, like the second, third quarter of last year. I guess the question is, what changed in the fourth quarter? Or was it just that the, you know, maybe some of these electronic controllers or electronic components, your inventories, you know, were lower and you just then the cycle times were stretching out and some, you know, now. I wonder if you can just provide a little bit more detail about, you know, just what changed in the fourth quarter, around supply chain. Yeah. I think you nailed it. It really was the incremental tightening on the electronics side. I mean, we're effectively sitting on zero inventory on electronics. So that's the big one. The other thing is logistics continue to get worse, and productivity and labor tightness, and open positions on the factory floor continue to get worse because of, you know, the turnover on the shop floor, et cetera. So you kinda have that triple whammy. You don't have all the parts in-house, you have less labor in order to process it, and then you've got higher costs on the logistics for when you do get it. That did get worse. Both the labor, the electronics got worse, the labor got worse, the productivity, and the logistics got worse. Okay. Are there any data points regarding the electronics and, you know, maybe when the cycle times loosen up a little bit or, you know, you're able to get more electronics in? No, not really. That's why we're just ordering a lot earlier, honestly. We're just really ordering months earlier than we otherwise would. Actually, one of the things that we're doing I didn't mention at this point is we are doing kind of some on-the-fly re-engineering and kind of figuring out what different parts that we could use in order to secure supply. "Hey, can we use this one instead of this one?" Do a little bit on-the-fly re-engineering. That's very costly. We've seen examples where a supplier, well-known electronic supplier, said, "Hey, guys, we can't get. I know we said we're gonna send you 300 of these things, you know, in Q2. It's gonna be, like, Q2 of next year instead, right?" We're going to get an alternate supply, and instead of paying $500 per piece, we're paying $2000 per piece. That's why you do see some of the inflation embedded into there as well. We've seen a lot of that. It's like I said, it is this hand-to-hand combat in terms of securing supply, but we're just doing it a lot earlier, as early as we possibly can, and being creative on smaller shipments, alternate suppliers, doing a little bit of re-engineering, and everything you could possibly do to secure that supply. Okay. All right, great. You know, kind of along the same lines, you know, when you're thinking about M&A, you know, does the supply chain issue, you know, it's hitting everybody. It's hitting your competitors. It's gotta be hitting some of these acquisition targets as well. You know, how do you deal with that with, you know, trying to figure out valuation or even, you know, timing of when you do these deals? Yeah. Fortunately, because we're experts in this supply chain challenges world, we know what questions to ask. We look at the same thing when we look at our own businesses. What's your backlog? What's in your embedded inflation and/or inefficiencies embedded into your backlog? We ask the right questions on you know what are the bottlenecks as relates to your supply chain and how that backlog is gonna convert to revenue and where are the risks. Yes, it's a huge issue. It's a similar situation where we're seeing the high demand environment with the M&A targets, but struggles on the margins. The question that we always ask is, "When are you gonna get back to normalized margins?" We are generally giving folks the benefit of the doubt, kinda like we're giving ourselves and looking forward to what the margin profile of this kinda should be, and when it comes to valuation, et cetera. Okay. I guess what I mean by this, but you know, does the supply chain issue mean that some deals might get delayed while they're trying to sort it out or- I would tell you some deals in the marketplace did get delayed, for sure. Stuff that we started looking at in the fourth quarter of last year, even the third quarter, started to get delayed because they were experiencing challenges. Now that they're kinda getting behind some of these things, we saw some stuff that, you know, kind of popped up six months ago that are starting to reemerge, especially with the higher backlogs. Okay. All right, great. The last one for me, you know, I think you guys may have talked about this, but in 2022, what is the incremental dollar spend for the digital? Yeah. For 2022, we're looking at about $14 million-$15 million on the P&L and about $45 million on the CapEx side. Kind of in that $60 million incremental range. We spent a couple million in 2021, and we do expect to spend in 2023, but more on a maintenance basis. There'll be some CapEx, there'll be some expense going forward as well, but nowhere near I would call it project costs that we're seeing in 2022. Okay. For that P&L cost in 2023, that might, you know, that maybe gets cut in half or even more than that. Yeah, there'll be a little bit of relief in 2023. Yeah. Yeah, I would hope it would get cut in half or better. Honestly, it a little bit depends on, you know, how many product lines we've rolled this out to and, you know, by the way, if we do an acquisition, we wanna roll them into it as well, right? That's one of the beautiful things about having a platform like this, is not only can you do it for your own product lines, but you can really help to monetize the benefit of the aftermarket businesses of these acquired businesses. Then that. It also allows us to do things like, for example, with the case of our Proseal business, which is, you know, pretty much 100% recurring revenue business, allowing, you know, new business models to roll into this digital platform as well in terms of how you monetize, how you measure. You know, ultimately, we'd like to get to, you know, really unique business models like Power by the Hour, things of that, which with this platform allows you to do. It creates an opportunity or an optionality for the art of possible. But frankly, that's a ways away. Really what we're trying to do to get here is to monetize the aftermarket. What it does do is at least provide some optionality on other different ways to monetize. Yeah, just to clarify that, Walter, I would say we will continue to invest in this into 2023. What the difference will be is that it would be more embedded in the business units and sort of more track the revenue that we expect to earn on the digital growth. I won't say it's gonna cut in half or anything like that, just where it goes in the P&L and where it's identified to track with revenue. Right. Okay. Okay, understood. All right, thank you. Your next question comes from Andrew Obin of Bank of America. Please go ahead, your line is open. Hey, guys. Good morning. Hey, good morning. Just, you know, just follow up on a bunch of questions, and thanks for answering a lot of questions. How much of what's happening do you think? Like, if you were to put it in buckets, how much of it is structural, where we're sort of moving from this, you know, disinflationary world, globalization, slow growth to, you know, maybe a lot more growth in the U.S., a lot more inflation, you know, less globalization. How much of it is structural, and how much of it do you think is sort of this near-term spike from Omicron? Yeah. In terms of the supply chain challenges specifically? Yeah, then just the overall environment. Correct. Right. Because it also impacts pricing, labor availability, just the entire business model. It's a really difficult question to answer. I will say to me, I would say at least half of it is simply just because of the whipsaw effect of going from lower production, lower demand to all of a sudden, really high demand, and just nobody was ready for that investment level. I just didn't think you saw the investments in the underlying, you know, factories on electronics, et cetera, for the years prior, and then anything that was otherwise would have been invested in 2020 kind of got, you know, delayed, so to speak, just because of the uncertain future. I do think that has a huge impact, but the problem is, I think it's a pretty big hole to dig out of. I do think it will take in certain categories through 2022 to get through, and we'll see. Other categories, we are starting to see just a little bit of relief. Steel and steel fabrications, the prices have started to come down, so ultimately we'll see some benefit of that. Availability is improving. I do think, Andrew, that just certain categories are just gonna be more structural for, you know, another year or two. Yeah. Maybe to take a different view on that is I think what we experienced in Q3 and Q4, and most likely after Q1, is more the structural issues that you referenced, Andrew. I think sort of the more negative impact we're seeing in Q1, specifically sequentially from Q4, that's really what's been driven by the Omicron. For us and our vendors. Yeah. Agree. Just a follow-up question to that. You know, are you guys redesigning? You know, I appreciate that electronics is sort of really tough because all of it is in Southeast Asia, I get that. But beyond that, are there opportunities to redesign the supply chain, go to sort of multiple sourcing, increase your own automation span, redesign the product? You know, are you doing any of that, and is there opportunity to do any of that going forward? Thank you. Yes, yes, and yes. We have expanded to more multiple sources of supply in smaller quantities. There's a cost impact to that, obviously. Both either within the certain geography or expanding beyond up to other geographies. We are also doing a lot of value engineering to figure out, you know, what other parts that are more widely available can be used in our designs. That's, you know, like I said, it's a little bit on the fly and tricky and, again, expensive. Yes, we're certainly doing some engineering and as well as expanding our vendor base to go along with it. We're literally, you know, pulling every kind of trigger we can. We're certainly adding resources on the engineering side and, you know, maybe lower cost engineering locations to support some of the value-added engineering that we need to do. That does take time. Many of the businesses are looking to also do more standardization. We are trying to accelerate, like, standardization of a control panel, for example. We are gonna try to accelerate that in light of some of these challenges that we've seen. That, unfortunately, takes some time and the resources, the availability to find them, to be able to implement that kind of change. Thank you so much. Great. We have completed the allotted time for questions. I will now turn the call over to Mr. Brian Deck for closing remarks. Thanks, everybody, for joining us this morning. Kedric and Matthew will be available if you have any follow-up questions. Thanks, all. This concludes today's conference call. Thank you for your participation. You may now disconnect.