JBT Marel Corporation Q3 FY2025 earnings call

• Exceeded revenue and earnings expectations in Q3 2025 with primary drivers being manufacturing/supply chain productivity, backlog to revenue conversion, equipment mix, and synergy savings.
• Raised full-year 2025 guidance due to strong Q3 performance. Combined JBT Marel orders were $946 million, up 7% Y/Y. Demand healthy across end markets including poultry, pet food, pharma.
• Integration of JBT and Marel remains on track with synergy savings, supply chain optimizations (e.g., renegotiated freight contracts), and new segment reporting planned for Q4 2025 (Protein Solutions and Prepared Food and Beverage Solutions).
• Published first joint sustainability report focusing on sustainable outcomes for customers, minimizing waste, energy/water usage, and improving traceability/safety.

JBT segment revenue in the third quarter was $465 million, increasing approximately 2% both year-over-year and sequentially. JBT segment adjusted EBITDA was $71 million, decreasing 13% both year-over-year and sequentially, with an adjusted EBITDA margin of 15.3%. The decrease in margins was due to unfavorable equipment mix, one-off project variances, and higher corporate-related costs. Marel segment revenue in the third quarter was $537 million, an increase of 12% sequentially. Marel segment adjusted EBITDA was $100 million, representing a margin of 18.6%. Marel's strong profitability was due to favorable mix from higher-margin poultry equipment, integration synergies, volume leverage, and improvement in fish and meat businesses.

• Full-year 2025 revenue expected between $3.76 billion to $3.79 billion, including ~$70M-$85M favorable FX translation.
• Full-year adjusted EBITDA margin forecasted 15.75% to 16%, adjusted EPS $6.10 to $6.40.
• In-year synergy savings for 2025 now anticipated $40M-$45M, with run rate savings $80M-$90M by year-end, on track to achieve $150M annual run rate savings within 3 years of combination.
• Expect net tariff impact before pricing actions to increase to ~$20M in Q4 2025 due to recently enacted Section 232 tariffs.

• Tariffs: Net tariff impact before pricing actions in Q3 was ~$15M, expected to increase to ~$20M in Q4 due to new Section 232 tariffs. Before mitigation, quarterly impact could be $22M-$25M.
• Potential component cost increases from proposed Section 232 tariffs on robotics/industrial equipment, though not expected to materially impact JBT Marel as equipment for food production is excluded.
• Supply chain challenges with sequential softness in Europe and Asia, though North America and Latin America had strong demand.

Q: Could you drill down on why Marel's EBITDA margin was much higher than JBT's in Q3?

A: Legacy Marel business had strong volume, operating leverage, higher share of synergies reducing corporate overhead, and improvement in meat/fish businesses. Marel's technology strength also contributed as volume increased.

Q: Talk about 4Q 2025 moving pieces compared to expectations 90 days ago?

A: Expect lower revenue in 4Q vs Q3 due to Q3 having a pickup from cleared backlog issues. Tariffs will impact margins unfavorably sequentially, and supply chain benefits from Q3 won't recur in 4Q. Also, investments in preparation for 2026 growth.

Q: Any cross-selling orders to call out and revenue synergy capture?

A: Seeing improvement in cross-selling opportunities, including a hamburger line order combining JBT and Marel portfolio, and combinations like DSI water cutter and SensorX bone detector. Account management model helps sales force sell entire portfolio, leading to more discovery of synergistic applications.

Q: Color on improvement in meat and fish margins and actions taken?

A: Focus on 80/20 analysis to identify top products and resource value streams appropriately. Addressing projects with variances and focusing on improving profitability rather than just top-line growth to build a solid foundation for growth.

Q: Growth outlook for 2026 and visibility?

A: Decent visibility due to strong backlog. Expect 2026 to be a growth year, with backlog and order pipeline supporting growth. Above 70% visibility to 2026 revenue by end of Q4.

Q: Selling prices and tariffs in Q3 and Q4?

A: Q3 revenue was volume-driven with some pricing benefit from Q2 price increases. Q4 will see tariff headwind with ~$5M extra cost from new Section 232 tariffs. Pricing includes current tariff knowledge, and price increases already factored into guidance.

Q: Manufacturing footprint shifts and timing?

A: Started shifting manufacturing footprint, with actions like utilizing domestic facilities more. Takes time, but sister plants (e.g., Boxmeer, Netherlands and Gainesville, GA) already help move volume. Longer-term developments will take 2-4 quarters.