JBT MAREL Corp Q3 FY2024 earnings call

• Brian Deck noted JBT achieved double-digit year-over-year revenue growth and margin expansion in the third quarter, with strong orders and recovery in the global poultry end market. He also discussed end market and geographic turns, merger with Marel integration planning, and highlighted the AGV business's strong performance.
• Matthew Meister detailed the third quarter financial results, including revenue growth, adjusted EBITDA increase, and year-to-date free cash flow of $79 million. He updated guidance for income from continuing operations and GAAP EPS due to pension plan settlements, and mentioned securing financing commitments for the Marel merger, with plans to reduce leverage to less than 3x by year-end 2025.
• Brian Deck elaborated on order trends, noting recovery in poultry, pet food, food, vegetable, and pharma end markets, geographic order momentum in Asia, Europe, and North America, and the AGV business's growth driven by investment in R&D, business model adjustments, and subscription model.

In the third quarter of 2024, JBT's revenue was $454 million, representing a 12.4% year-over-year increase. Adjusted EBITDA was $82 million, up 23% year-over-year, with an adjusted EBITDA margin of 18% (an increase of 160 basis points). The AGV business is a significant contributor, with revenue north of $150 million this year and over 30% growth. AGV margins are above JBT's overall 17% to 17.5% guidance range, aiming for 20% plus this year. In terms of revenue contribution, the AGV business is a growing segment within JBT's portfolio.

• Reiterated full-year guidance for revenue, adjusted EBITDA, and adjusted EPS.
• Updated guidance for income from continuing operations to $116 million to $125 million and GAAP EPS to $3.60 to $3.90 due to pension plan settlement charges.
• Anticipates further non-cash pretax charges in the first quarter of 2025 related to pension plan settlements.
• Secured financing commitments for the Marel merger, with plans to issue a $900 million Term Loan B and expand the revolving credit facility to $1.8 billion, aiming to reduce leverage to less than 3x by year-end 2025.

Q: Could you provide a reminder on the size of the AGV business and its margin?

A: The AGV business is north of $150 million in revenue this year with over 30% growth. Margin-wise, it's above JBT's overall 17% to 17.5% guidance range, striving for 20% plus this year.

Q: How do you see the AGV business crossing-sell with Marel's customers?

A: Opportunities exist in warehouse automation areas, particularly with CPG and pet food customers. For example, cross-selling with Marel's pet food business (via Wenger acquisition) is a potential area.

Q: Can you size the poultry contribution to orders in the quarter and expectations for orders exiting the year into 2025?

A: Poultry orders in the quarter were $10 million to $15 million more than the second quarter in North America, with improvements also seen in Asia and Europe. North America remains a key area for potential acceleration into 2025.

Q: What about EU regulatory filings and other jurisdictions?

A: The EU formal filing has started a 25-day review period, with confidence in finalizing approvals by the end of November. Australia is the other jurisdiction being finalized, expected to play out within the same time frame.

Q: Should we expect upward revision to synergy targets once the acquisition is closed?

A: Confident in delivering on the $125 million of all-in synergies, and will update if further opportunities arise, but currently sticking with the $125 million target.

Q: Thoughts on aftermarket sales growth?

A: Happy with 5% plus revenue growth in aftermarket. Focus on on-time delivery of parts, OmniBlu digital offering, and service network optimization. Merger with Marel enhances aftermarket capabilities via their parts distribution centers and service network.