JBT Marel (JBT) Q2 2025 Earnings Call August 05, 2025 10:00 AM ET Speaker0Welcome to JBT Morell's Earnings Conference Call for the 2025. My name is Tiffany, and I will be your conference operator today. As a reminder, today's call is being recorded. At this time, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.I will now turn the call over to J. B. T. Morell's Senior Director of Investor Relations, Marley Spangler, ...

Financial Data and Key Metrics Changes - JBT Morell's first quarter revenue exceeded guidance by $19 million, driven by better-than-expected equipment shipments and strong recurring revenue [17] - Adjusted EBITDA margin was 13.1%, outperforming guidance by 60 basis points, attributed to volume flow-through, favorable mix, and good expense control [17] - Free cash flow for the quarter was $18 million, including approximately $42 million in one-time M&A related payments [19] Business Line Data and Key Metrics Changes - JBT segment revenue increased by 4% year over year, or 5.6% on a constant currency basis, with adjusted EBITDA of $61 million, a 6% increase [18] - MRL segment revenue was flat year over year but grew by 2% on a constant currency basis, with adjusted EBITDA increasing by 19% to $51 million [19] Market Data and Key Metrics Changes - Demand from the poultry industry continued to recover, contributing to a 12% year-over-year increase in orders [6] - The company experienced broad-based strength across global regions, with healthy orders in meat, beverage, pharma, and pet food [6] Company Strategy and Development Direction - The company is focused on integrating its operations to enhance service capabilities and product offerings, positioning itself as a leader in sustainable food solutions [15] - JBT Morell is taking actions to mitigate tariff impacts, including securing concessions from suppliers and implementing selective pricing actions [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage near-term impacts from tariffs and macroeconomic uncertainty, highlighting the resilience of recurring revenue [11][23] - The company has temporarily suspended full-year financial guidance due to uncertainty but provided second-quarter guidance, expecting revenue of $885 million to $915 million [22] Other Important Information - The estimated annualized cost impact from tariffs is approximately $50 million to $60 million, with efforts underway to mitigate these costs [10] - The company is on track to achieve targeted cost synergies of $150 million by the end of 2027 [20] Q&A Session Summary Question: Update on guidance and customer behavior - Management indicated that the decision to pull full-year guidance was due to lack of clarity in the environment, with no significant changes in customer behavior noted [26][28] Question: Backlog and order delays - Management clarified that the backlog was affected by foreign exchange and adjustments during the integration of the two businesses, with no cancellations reported [45] Question: Recurring revenue and digital offerings - The increase in recurring revenue above 50% was primarily due to seasonality in equipment revenue recognition, with ongoing efforts to integrate digital offerings [66] Question: Cost mitigation strategies - Management discussed various strategies to mitigate tariff impacts, including reallocating demand to domestic suppliers and adjusting purchasing strategies [78][80] Question: Integration progress and potential demand changes - Management expressed confidence in managing costs and achieving synergies, but noted that lower demand could impact material purchasing and synergy savings [92]

Financial Data and Key Metrics Changes - JBT Morell's first quarter revenue exceeded guidance by $19 million, driven by better-than-expected equipment shipments and strong recurring revenue [17] - Adjusted EBITDA margin was 13.1%, outperforming guidance by 60 basis points, attributed to volume flow-through, favorable mix, and good expense control [17] - Free cash flow for the quarter was $18 million, including approximately $42 million in one-time M&A related payments [19] Business Line Data and Key Metrics Changes - JBT segment revenue increased by 4% year over year, or 5.6% on a constant currency basis, with adjusted EBITDA of $61 million, a 6% increase [18] - MRL segment revenue was flat year over year but grew 2% on a constant currency basis, with adjusted EBITDA of $51 million, a 19% increase [19] Market Data and Key Metrics Changes - Demand from the poultry industry continued to recover, contributing to a 12% year-over-year increase in orders [6] - The company experienced broad-based strength across global regions, with healthy orders in meat, beverage, pharma, and pet food [6] Company Strategy and Development Direction - The company is focused on integrating its operations to enhance service capabilities and product offerings, positioning itself as a leader in sustainable food solutions [15] - JBT Morell aims to leverage its global footprint and available capacity to manage tariff impacts and maintain competitive positioning [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties and tariff impacts, noting that approximately half of the revenue comes from resilient recurring sources [11] - The company has temporarily suspended full-year financial guidance due to uncertainties but provided second-quarter guidance reflecting strong competitive positioning [21] Other Important Information - The estimated annualized cost impact from tariffs is approximately $50 million to $60 million, with efforts underway to mitigate these costs [10] - The company is on track to achieve targeted cost synergies of $150 million by the end of 2027 [20] Q&A Session Summary Question: Thoughts on guidance and customer behavior changes - Management indicated that the decision to pull full-year guidance was due to lack of clarity in the environment, with no significant changes in customer behavior noted [26][28] Question: Differences in customer behavior between U.S. and international markets - Management noted ongoing conversations regarding equipment pricing and potential shifts in manufacturing locations due to tariffs, but demand remains strong [30][33] Question: Impact of tariffs on recurring revenue - Management believes that recurring revenue will remain strong, with no significant pullback observed in parts orders [35] Question: Details on backlog and order delays - Management clarified that backlog figures may differ due to foreign exchange impacts and adjustments during the integration process, with no cancellations reported [45] Question: Insights on fish market performance - Management noted challenges in the white fish market but highlighted improvements in the salmon industry, indicating a positive outlook for production growth [62][65]

Financial Data and Key Metrics Changes - JBT Morell's revenue exceeded guidance by $19 million, driven by better-than-expected equipment shipments and strong recurring revenue [17] - Adjusted EBITDA margin was 13.1%, outperforming guidance by 60 basis points, attributed to volume flow-through, favorable mix, and good expense control [17] - Free cash flow for the first quarter was $18 million, including approximately $42 million in one-time M&A related payments [19] Business Line Data and Key Metrics Changes - JBT segment revenue increased by 4% year over year, or 5.6% on a constant currency basis, with adjusted EBITDA of $61 million, up 6% [18] - MRL segment revenue was flat year over year but grew 2% on a constant currency basis, with adjusted EBITDA increasing by 19% to $51 million [19] Market Data and Key Metrics Changes - Demand from the poultry industry showed a 12% year-over-year increase, continuing a recovery trend [5] - The company experienced healthy orders across diversified end markets, including meat, beverage, pharma, and pet food [5] Company Strategy and Development Direction - The company is focused on integrating its two organizations to enhance customer service and product offerings [13] - JBT Morell aims to leverage its comprehensive portfolio of solutions to support customers across the entire production value chain [15] - The company has temporarily suspended full-year financial guidance due to macroeconomic uncertainties and tariff impacts [7][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage near-term impacts from tariffs and macroeconomic uncertainties [7] - There is less visibility for the second half of the year due to potential slower economic growth and higher prices affecting customer investment decisions [8] - Management noted that approximately half of the company's revenue comes from resilient recurring revenue, which is beneficial in uncertain times [11] Other Important Information - The estimated annualized cost impact from tariffs is approximately $50 million to $60 million, or $12 million to $15 million per quarter [10] - The company expects to achieve total in-year cost synergies of $35 million to $40 million in 2025, with annual run rate savings of $80 million to $90 million by the end of the year [20] Q&A Session Summary Question: Thoughts on guidance and customer behavior changes - Management indicated that the decision to pull full-year guidance was due to lack of clarity in the environment, not significant changes in customer behavior [26][28] Question: Recurring revenue impact from tariffs - Management believes that the recurring revenue component is less likely to be impacted by tariffs, as there was strong order strength in parts before tariff visibility [34] Question: Backlog and order delays - Management clarified that the backlog was affected by foreign exchange and adjustments during the integration process, with no significant cancellations reported [45] Question: Integration and demand impact - Management stated that cost synergies can continue regardless of demand changes, but material purchasing volume could be a risk in a lower demand environment [94]

Q1 2025 Earnings Presentation May 5, 2025 FORWARD LOOKING AND NON-GAAP STATEMENTS This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond JBT Marel's ability to control. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estim ...