Good morning, and welcome to JBT Marel's Earnings Conference Call for the Fourth Quarter and Full Year 2024. My name is Pam, 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 JBT Marel's Director of Investor Relations, Marlee Spangler, to begin today's conference.

Thank you, Pam. Good morning, everyone, and thank you for joining our conference call. With me on the call today is our Chief Executive Officer, Brian Deck; President, Árni Sigurdsson; and Chief Financial Officer, Matt 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 Marel'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 and non-IFRS measures. Reconciliation of these measures to the most comparable GAAP and IFRS measures can be found in the Investor Relations section of our website. With that, I'll turn the call over to Brian.

Thanks, Marlee, and good morning. We are excited to be hosting our first earnings call since uniting JBT and Marel. The combination, which we completed on January 2, represents the culmination of more than a year of work bringing together two leaders in the food technology industry. We are now seven weeks into integration and are increasingly confident in our ability to generate long-term value for our customers, shareholders, and other stakeholders. Given our focus on realizing the benefits of this combination, I will begin today's call providing an update on our progress. Then Árni will provide color on the integration process and talk about Marel's 2024 performance. Lastly, Matt, will provide an overview of JBT's 2024 performance followed by guidance for the combined company in 2025. In uniting JBT and Marel, we have the ability to be an even more valuable partner to our global customers by providing holistic equipment solutions with enhanced application knowledge, service capabilities, and innovative technology. In terms of integration, our efforts are focused on best serving our customers constantly evolving needs that starts with a purpose-built company leveraging talent from both organizations. We have already made significant progress establishing the JBT Marel organizational design and expect to be materially complete by the end of March. We're also focusing on a customer-centric go-to-market commercial strategy that adopts an end market focus. This will allow us to cross-sell the breadth of our solutions. We believe this customer-driven approach versus one organized by technology will streamline our commercial presence and enhance our value proposition to the customer. In fact, our diverse technology solutions were on full display at the recent IPPE trade show, otherwise known as the poultry show. The combination of JBT and Marel's complementary portfolio of innovative technology and service capabilities allows us to integrate…

Thanks, Árni, and good morning. Let me begin with a quick recap of JBT's performance in 2024. We ended the year with extremely strong orders in the fourth quarter up 25% year-over-year and 19% sequentially. For the full year, orders increased 7%. JBT's full year revenue increased 3% or about 3.5% organically excluding the impact of foreign exchange. Adjusted EBITDA of $295 million increased 8%. The adjusted EBITDA margin of 17.2% for the year was an improvement of 80 basis points driven by supply chain savings and continuous improvement initiatives. Specific to the fourth quarter, our results came in at the lower end of our guidance due to a mix of lower than expected volume on quick turn book and ship revenue and some delayed equipment shipments. On the expense side, we had higher than expected employee healthcare costs. That said, adjusted EBITDA margins for the quarter were 19.7%, which represented 150 basis point improvement over the prior year. Beginning in 2025, we are revising our adjusted EPS calculation to exclude acquisition related items such as intangible amortization expense. We believe this change will be -- will better reflect our core operating earnings and improve comparability versus peers. When further adjusted for this change, JBT's 2024 standalone adjusted EPS would have been $6.15, compared to the reported figure of $5.10. Finally, for 2024, we delivered strong cash flow performance driven by more efficient management inventory and higher deposits from the strong order growth. For the year, we generated free cash flow of $199 million, an increase of 20% from the prior year period. Now, let's move to the results and expectations for the combined JBT Marel business. On a combined basis, which reflects adjustments to align Marel's IFRS results with U.S. GAAP, 2024 results were as follows: orders of $3.6…

Thanks, Matt. There's been a tremendous amount of hard work getting to this point where we can leverage our combined expertise and achieve more for our employees, customers and communities at JBT Marel. Together we've established an unmatched position across the value chain as the premier global food and beverage solutions provider. Thank you to everyone across the organization for all you've done. We look forward to the exciting things to come as we transform the future of food. Now let's open the call to questions. Operator?

Thank you. We'll now begin the question-and-answer session. [Operator Instructions]. And your first question comes from Saree Boroditsky with Jefferies. Please go ahead.

So I wanted to touch on the synergies. So you are now kind of two months into owning Marel and you are able to increase the cost synergy guidance on the kind of supply chain synergies. So can you talk more about what gave you confidence to raise the guidance like a little bit more color on the supply synergies? And was there a lot of like low hanging fruits that you were able to identify after owning them? Thank you.

Yes, good question. So we've been working together, the two companies for the last year or so, but there has been certain limitations on vendor names, customer names, et cetera, that until we combined we were able to have access to. So after getting access to that, we were really able to determine our strategy as it relates to supply chain savings and including some of the early hits, we do feel that, that 38 -- that $35 million to $40 million first year savings will include some early hits on the supply chain side as well as some of the organizational design things that we're doing. So it really, the confidence really came along from access to information that we otherwise didn't have in the past.

Got it. Great, thanks for the color. And I guess, kind of staying on the synergy on more on the revenue side, I think you noticed some benefit to like customers like providing like integrated solutions and opportunities to kind of cross-sell. So can you provide more color on kind of revenue synergy opportunities?

Yes. We're really excited about this. So as I mentioned in the prepared remarks, we had a really excellent IPPE show, the poultry show and the conversations were great. And frankly, the thing that was most exciting about it was the way our commercial teams interacted with one another. They really fell right into understanding each other's product lines. We obviously have experts across the industry, so it was fairly natural for them to be able to engage in conversations with customers on a combined basis. And as part of that what we also found was each company, legacy company has some particularly strong relationships with certain customers and that really facilitated conversations about providing either JBT or Marel solution to some of the projects that they were considering that perhaps they had not considered one or the other in the past. So that, that was -- that really developed nicely. And then, I would say we announced earlier $75 million of revenue synergies by year three. We haven't updated that, but we are taking a close look at it. Again now that we have access to customer data and conversations on a more combined basis, we are taking a review of that and we'll follow-up in the next quarter or two at what that means. Árni Sigurdsson: And just briefly to add on that, I think what was exciting around kind of what we heard and saw and experienced at IPPE was a lot of conversation in the prepared foods area where our portfolio is quite complementary. And we've talked in the past, for example, a chicken nugget line, when you do see kind of the different technologies across that same line. So that's where we saw some interesting opportunities. It was really kind of confirming what we believe, but it was just nice to see that really happen.

Your next question comes from Mirc Dobre with Baird. Please go ahead.

Thank you. Good morning, everyone. And I'll apologize in advance; I actually have a bunch of questions, so hopefully you humor me here. I guess, maybe we can start with a clarification. Maybe I missed this in the guidance slides, but free cash flow for 2025, how should we think about that? Yes, let's start with that. Let's start with free cash flow.

Yes, Mirc, I think from a free cash flow perspective, it's still a little early for us to provide sort of specific numbers around that, I'd say as we try to get a better feel for how the cadence and cash flows will go through the year. But I think the fundamentals of the business of both businesses together still remain strong with relatively low CapEx, high recurring revenue, and deposits from customers. And so when we account for some of the one-time items on the P&L side, our expectation is that we should be able to achieve 100% free cash flow for the year.

On adjusted net income, right.

Right.

Right. So yes, so we'll provide more guidance. But if you think about the general profile of this business Mirc, it's still quite attractive when you think about the math just between the CapEx spend versus the depreciation and kind of how that flows. We will have a lot of one-time costs in 2025 as mentioned in the press release. But if you kind of look away from that, it's certainly a profile of more than 100% of adjusted net income.

That's helpful. One of the things that also stood out to me was the order intake, right, for I think Marel had a bit of a tough comp and yet they were able to grow off of that. You had quite a bit of growth in legacy JBT. Maybe talk a little bit about what's going on here. We heard from you that the poultry markets are getting better, but I guess, it's more than just poultry. And the question here is on sustainability into 2025. Has this quarter simply been a bit unusual? Was there like a CapEx flush or something like that that helped you out, or are these trends kind of sustaining into Q1? I mean, we're almost through February. What have you seen in Q1 thus far?

Sure, I'll provide some comments on legacy JBT and Árni can provide a little bit on legacy Marel and kind of how we're thinking about this going forward. So on the JBT side, what we normally see is I'm talking from an end market perspective. There's always pluses and minuses, fruit and juice is up, maybe beverages down and that's since I've been here, that's always been the case because these are lumpy projects often. So you see a lot of variability and almost magically kind of evens out by the end of the quarter. However, in the fourth quarter, there was really no weak markets, which is quite unusual. So everything kind of hit. We mentioned ready meals, pet food, our AGV business, fruit and juice, even beverage improved in the quarter. Poultry remained strong. So it really kind of just flowed through it in a nice way. I can't say this was a CapEx dump, but here's the way I think of it generally is a $900 million kind of the baseline for us, right and that billion dollars in the month was extraordinarily strong. So I still think we're going to coalesce around that number, plus or minus. And there'll still be variability given the lumpy nature of our business. So I do think there will be some general reversion. But overall, the markets are strong right now. And I put the caveat about regarding tariffs and whatnot, but kind of aside from that, conditions do seem strong. Árni Sigurdsson: Yes. And on the Marel side, obviously very pleased with the orders in the quarter. And poultry -- the poultry market continues to be quite attractive and we see that in also just if you look at the results of some of our customers, I mean, they're showing very robust numbers on the poultry side. So that, that continued to be healthy in the fourth quarter for us. But then if we look at it sequentially, then we saw improvement in the other segments as well on the Marel side. And what I would say is on the pork side, kind of the market sentiment is improving, but kind of from a very low level, there is kind of with the low investment that has been there kind of throughout the cycle, there needs to be at some point catch up on kind of renewing the install base and more automation. And we kind of consolidation in Europe is in the final steps kind of we saw improved pipeline in the fourth quarter on the pork side. So that was kind of encouraging. I mean, fish also improved sequentially, but I think I'm not as confident about the market there yet, even though we really believe in the fundamentals of that market.

And Mirc, just to clarify, that $900 million baseline, that's the combined company quarterly kind of I'll say baseline, if you will, for orders.

Thank you for the clarification there. And I want to move on to your outlook, your guidance. Apologize for the numbers and the math here, but I'm trying to understand the moving pieces, right? So at the midpoint, your EBITDA you're guiding at $582 million. On a combined basis, the company has done pro forma $479 million. So we're looking at $103 million of EBITDA growth, 37 of that is synergies. So the rest of it 66 would be the lift from the two businesses. When we look at this 66, how much of it comes from legacy JBT versus lift in Marel's business relative to the prior year?

Yes. I think the starting point on the $479 million for 2024 Mirc is you have to adjust for the year-end piece at Marel was about $20 million or so 17 -- US$20 million of sort of year-end adjustments. You kind of add that back as a starting point. So you're kind of starting closer to $500 million for the combined company and then you add in the synergies. So now you're at $538 million. So now you're kind of doing the math off of that number. And so the flow through from the combined business is closer to like 35% to 40% and it's a little higher than we would typically expect for flow through on the combined business. But there is a benefit from Marel on some of the restructuring activities that they took in 2024 that's also coming through and we estimate that sort of around $8 million to $10 million benefit in 2025.

Right. So you've got the benefit of the synergies, the volume as well as some of the, I'll say, rollover of some of the actions that Marel took in last year. So overall, Mirc, I would say more of the improvement is coming from the Marel side given some of the -- they have a little bit higher growth rate in their forecasted revenues versus JBT because of the recovery -- continued recovery of the poultry market as well as some of the restructuring actions that they took last year, which will flow into this year.

To be honest with you, based on what you've just told me, to me it seems like it's the opposite. Where you end up with ex-synergies, you end up with maybe less than $50 million of EBITDA lift. But a good chunk of that would probably come just from JBT and the growth that you have on your business, assuming normal incremental margins on that organic revenue growth, which, I mean, maybe I'm missing something where you're just being conservative, which is perfectly fine. Just looking to make sure that we understand the moving pieces.

Yes. So I think we've given revenue guidance for the two businesses individually. And if you look at that and apply, generally you apply 30%-ish flow through on that incremental volume and then from there, you add on the benefit of the synergies of whatnot. So take a look. We're happy to walk through in more detail as we go from here, but our math shows a little bit more contribution from the Marel side than the JBT side, at least from an EBITDA perspective.

Perfect. Then my final question is on Marel specifically, as we're trying to look through what the fourth quarter look like, at least on our math, the fourth quarter looked to be a sequential step down in margin and maybe even tougher than some of the prior quarters in 2024. Maybe you can give us some context or Árni can give us some context as to what's been going on with margins in the fourth quarter. And big picture sort of how you think about progression here through 2025. And maybe you can comment on fish and meat specifically because it's pretty clear that poultry is doing all right, the other two segments that have struggled. Thank you. Árni Sigurdsson: Yes. So what I would say, we saw healthy -- absent the balance sheet adjustment that we talked through, we saw a good margin in Q4, both improving sequentially and year-over-year. So I think kind of that is moving in the right direction. We also saw that kind of moving in the right direction for fish and meat. But there's still a lot of work to be done on that front. So we are kind of just taking kind of -- so that's kind of on the margin side where we kind of, yes, are on the right track and kind of exiting the year at a healthy level or more healthy level kind of improving over the year. And we can expect to be able to kind of do more as we enter 2025. And I mean, some of the initiatives that we have been going through we will continue with, such as kind of standardizing the portfolio, more rigorous kind of project control and selecting the projects. And then we're also going to have designed the combined organization in a way where we believe those businesses will benefit more with greater scale in emerging markets, embedding the service capabilities and some of the other designs that we have taken.

And to add onto that Mirc as we look to bring some of the continuous improvement capabilities, we've already started that on both meat and fish, and we obviously have a large tool chest. One of the things we're actually looking at right now is applying some of the 80:20 approach to the business and looking at the segmentation of the larger customers, larger projects and product lines and how that profitability is segmented and making sure that we've got the right resources in the right places to attack that. So as well as some of the general continuous improvement things that we're looking at. So we are laser-focused on the overall improvement on the synergies perspective. But in particular meat and fish are getting good attention all the way up to the top.

Yes. And just -- Mirc, just to clarify again on the Q4 margins, again we want to make sure we kind of look at it with and without the year-end adjustments that were booked at Marel in December. Those were really some sort of alignment on accounting policies and procedures between Marel and JBT. And so they're a little bit, I think kind of one-time in nature and related to some older inventory and some older AR valuation reserves. And I think if you look at the underlying business, I think what Árni had said that they are seeing some improvements in the margins and that's what we would expect to see heading into 2025.

I'm sorry, just to clarify, the €20 million -- that was a €20 million add back. So in the fourth quarter with the IFRS margin at Marel be somewhere close to 15%. That's my last question.

Yes, I think it's in the 13% to 14% range. It's $20 million, it's about €17 million.

Okay, helpful.

We're not adding that back from an adjusted perspective. It's just a different; I think again a different kind of accounting approach. So I don't want to blur the underlying performance of the operations with that those adjustments.

Understood, understood. Thank you.

But you're correct. Mirc. If you look at the reported results IFRS €200 million that is burdened by about $17 million, $18 million of one-time items.

And if you would absent of that, you would have kind of EBITDA margin for the full year kind of a little bit north of 13%. And so fourth quarter was more healthy than that.

Your next question comes from Ross Sparenblek with William Blair. Please go ahead.

Matt, you touched on this in your opening remarks, but can you maybe just remind us of the timing for backlog conversion for JBT and Marel and kind of what that mix looks like on a pro forma entity going forward?

Yes, I mean, for the most part, we look at about for JBT, it's in the 50% or so of our equipment revenue is in backlog that we'd expect. So the backlog for equipment is sort of in the $450 million range for JBT historically or legacy JBT. And only a small portion of that sort of bleeds into next year. We did take some bigger pharma projects and fruit and veg projects, so those will bleed into 2026. For Marel, they do have some larger Greenfield type projects that do have longer lead times. I don't have the exact sort of timing of that, but I would expect their revenue cadence to look very similar in terms of the backlog for equipment. So I'd expect probably 80% to 85% of their backlog on equipment would result in revenue in 2025.

And I'd say as a whole, when you consider the stability of the recurring revenue business, when you kind of add that into kind of the visibility as we start the year on the equipment side, we have somewhere ballpark 70% visibility for the full year revenue.

Okay. So with that expectation, then recurring revenue is probably being implied over 50% in kind of your 2025 guidance.

Actually a little bit less because your equipment -- we were about -- combined right about 50% last year. However, we do expect equipment growth to outpace aftermarket growth in 2025. So the mix will actually will grow both, but the mix will change a little bit just because of the outside growth on the equipment side.

Okay, that's helpful. And then just going back to a prior question on kind of the Marel margin list for next year. The filings called out, I believe, 11,700 employees, which does imply some material attrition over the past year. So just trying to get a sense of timing there around the reductions and maybe how we should think about sizing that that benefit in the context of the 8 to 10 Marel prior restructuring actions that are going to step up next year.

Yes. I think there's two things to kind of mention there, Ross. First, I think there is, as we're going through this integration process, some definitional differences between what was reported historically for Marel and what we reported is at 11,700. So that's a little bit of the difference. But I do think that Marel has taken some significant actions in 2024 to reduce their FTEs. That's sort of already built into our guidance and part of the additional self-help that we were talking about in terms of the margin uplift for Marel and that is before we actually think about this, the benefit from synergies.

Okay. And is there any definitional changes between the recurring revenue for Marel and JBT kind of look like there might have been something…

Slightly, slightly. There's a -- the big question is open question is refurbishments and how they we both treat those. Otherwise, we haven't married those up quite yet. So we will do that as we report out the first quarter, but not materially.

Okay. Thank you, guys.

Your next question comes from Walt Liptak with Seaport Research Partners. Please go ahead.

Hi, thanks. Good morning and congratulations on the deal.

Good morning. Thank you.

What is about the year one synergy savings, and I wonder if you could just help bucket it for us, in terms of procurement versus people costs versus plan consolidation. And then on that procurement side, how are you thinking about pricing and tariffs this year? And if there are inflationary pressures, how do you expect to deal with those?

Yes, I'll take the first part, Walt. So in terms of bucketing, I would say approximately of the 30 -- $35 million to $40 million, 45% to 50% of that is related to procurement and cost of goods sold. And the remainder of the synergies is going to be related to either redundant contracts, logistics and other SG&A related sort of redundancies that we may have between the two businesses.

And then as it relates to tariffs, it's still a little bit early to tell. We still don't know all the specifics of the tariff policies and any potential retaliation. So we haven't factored in tremendous amount into the numbers right now, mainly because as it sits today with what has been announced, we can largely manage through that in terms of our supply chain. So over the last few years coming out of COVID and this is applies to both legacy Marel and JBT, we've enhanced our supply chain in terms of more options. I'll say more diversification of our supply chain just because of some of the challenges we saw a few years ago. So I think we're both well-positioned and we're particularly well-positioned relative to our competition given our global scale, our strength of our procurement organization as well as our diversified manufacturing footprint. So we do need to see how this plays out. But I think in the short-term, in terms of at least what we know today, we don't see a material impact in 2025.

Okay, okay, great. Thanks for that. And I wanted to ask a follow-on, you commented about doing some segmentation and some 80:20 work, and that's very interesting to me. I wonder if you could talk a little bit more about that. Is this like a homegrown thing or are you bringing in experts? Like, is it how robust of a 80:20 program are you thinking about?

Yes. Well, we are the experts on continuous improvement in 80:20. So we have more than enough resources within the company. So what we're going to do is just to get a little bit more specific. What you do is look at the revenue streams and you segment that and look at the underlying, I'll say concentration and then what are the costs associated with those buckets, if you will, and then you make sure that you're serving your best customers and your best product lines in a way that allows you to grow them and then taking a close look at your projects otherwise and I'll say the discipline around pricing, the discipline around costing those projects before you give those quotes and then strongly in execution on those projects as you go through. So there's a lot of different tools that we'll have, it's not just 80:20, but as continuous improvement experts, we are focused on this.

Okay, great. Thanks. And then with regard to the change in focus to end markets, has that happened already or what's the timing on that taking place?

It's happening as we speak. It started organizational design started in the fourth quarter and continues through the end of the first quarter here. So organizationally wise, we should be done by the end of the first quarter. I think there'll be some transition over the next few months, but I would say, we would be done with that transition by the middle of the year completely.

Your next question comes from Justin Ages with CJS Securities. Please go ahead.

Hi, how's everyone doing?

Great, thanks.

During the prepared remarks, there was a comment about some Greenfield opportunities, but just hoping to get a little more color on either end market or where that is. Árni Sigurdsson: Yes. So I mean, I would say first and foremost that is in the poultry segment. I mean, that is an area where kind of the fundamentals have been improving. We've seen some of those opportunities kind of in the past. I mean, I think Marel spoke to kind of one big one in the fourth quarter of 2023, which kind of explained the top comp for Q4 2024. And then we've seen kind of just the improvement in the market in the second half of 2024. Also what is very interesting, which I've spoken about in Marel's result is some of the solutions and technologies that we've been introducing in the U.S. market, such as the -- a line split solution that allows our customers to increase the line speeds. And the Marel has kind of very good technologies to be able to advance the industry and help our customers in particular in the U.S. market to invest. So there's a lot of -- there's a few very interesting opportunities that we see there. It's still early, but we're optimistic.

And just to follow-up on that. So on the poultry side, Marel's technology is best-in-class without question. And some of these techniques of line split allows, I'll say the unleashing of the speed and that technology that is currently, I'll say, under some restrictions under the USDA policy. But this line split solution effectively allows us to again leverage this technology while still remaining compliant with USDA. So that's exciting for our customers. In fact, what we do here is if you can unleash this technology in these line speeds, it allows customers to take current, I'll say, inefficient operations. Maybe you can close two facilities and open one new Greenfield facility that you could take on that capacity with one operation. So those are the type of conversations that are happening on the poultry side. And then on the non-poultry side, what we have been seeing is, particularly in the Middle East, a lot of Greenfield opportunities on the farmer side. So those are the areas where we are seeing some good activity.

That's helpful. Thanks. And then just one more on AGV and I know it's a smaller portion of the combined entity now, but was hoping to get a little more color. I know you said demand in fourth quarter was good, but looking ahead, what is -- what are expectations for that segment or end market; however you want to define it?

Yes. AGV is a great business. It was probably -- it was definitely our most improved business in 2024. We talked quite a bit about that. I won't go into all those details but there's very good business. So -- and in terms of go-forward expectations, continued double-digit revenue growth and they are in that 20% EBITDA range so accretive on the growth and accretive on the margins.

There are no more questions. I will now turn the conference back over to Mr. Brian Deck for closing remarks.

Thank you all for joining us this morning. As always, our Investor Relations team will be available if you have any additional questions.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.