Good day, everyone, and welcome to JBT Marel's Earnings Conference Call for the Third Quarter of 2025. My name is Jim, and I will be your conference operator today. As a reminder, today's call is being recorded. It is now my pleasure to turn the call over to JBT Marel's Senior Director of Investor Relations, Marlee Spangler, to begin today's conference.

Thank you, Jim. Good morning, everyone, and thank you for joining our third quarter conference call. With me on the call is our Chief Executive Officer, Brian Deck; President, Arni 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 IR 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 IR section of our website. With that, I will turn the call over to Brian.

Thanks, Marlee, and good morning. As you saw in our earnings release, we significantly exceeded our expectations for revenue and earnings in the third quarter of 2025. Primary drivers of our outperformance were excellent manufacturing and supply chain productivity, which enabled higher backlog to revenue conversion, a favorable equipment mix and an acceleration of synergy savings. In light of our strong third quarter performance, we have raised our guidance for full year 2025. At the same time, demand remained healthy with combined JBT Marel orders of $946 million, an increase of 7% from the prior year period. In particular, we experienced continued equipment investment from the poultry industry, our largest end market, and our pipeline for poultry-related projects is expected to provide support well into next year. Beyond poultry, orders from pet food and pharma were robust in the quarter. In the ultimate display of the benefits of diversification, we took two large orders in support of a major pharmaceutical firm's investments in GLP-1 production capacity. Geographically speaking, demand was strong in North America. While Europe and Asia were softer sequentially, we enjoyed a good quarter in Latin America with some large pet food, poultry and juice orders. We ended the quarter with a backlog of $1.3 billion. That, coupled with our resilient recurring revenue, provides visibility for the remainder of the year and support as we enter 2026. Additionally, as Matt will discuss, we made further progress on deleveraging our balance sheet. And as Arni will highlight, the integration of JBT and Marel's remains on track as we take actions to capture synergy savings and enhance our value proposition to customers. I will come back at the end and talk about a few ongoing initiatives that will make JBT Marel an even stronger partner to our customers over the long term. Let me turn the call over to Matt to discuss our third quarter performance and revised outlook for the year.

Thanks, Brian. For the third quarter of 2025, total revenue was around $1 billion, reflecting a 7% increase sequentially. We surpassed our revenue forecasts by about $65 million due to strong manufacturing and supply chain productivity, allowing us to convert nearly $45 million more backlog into revenue than initially expected. Additionally, we saw roughly $20 million in increased book and ship revenue compared to our expectations. The quarter's revenue also included around $26 million from favorable year-over-year foreign exchange translation, meeting our projections. Our adjusted EBITDA margin for the quarter was 17.1%, exceeding expectations by about 140 basis points. Margins were stronger than anticipated, driven by a favorable mix of poultry equipment and shorter-cycle products, combined with better-than-expected synergy savings. We achieved year-over-year synergy savings of $14 million this quarter. GAAP EPS for the third quarter was $1.28, while adjusted EPS was $1.94, which excludes certain one-time items and acquisition-related costs detailed in our recent press release and investor presentation. Regarding tariffs, based on current understanding, we still believe the quarterly impact of JBT Marel's material costs before any mitigation efforts will be in the range of $22 million to $25 million. Thanks to our cost mitigation initiatives, the net tariff impact before pricing actions was about $15 million in the quarter, slightly lower than expected. We anticipate this net cost impact before pricing actions to rise to around $20 million in the fourth quarter, primarily due to newly enacted additions to Section 232 tariffs. In the intermediate term, we will seek to boost the utilization of our domestic facilities for production and assembly while further localizing JBT Marel's supply chain. Concerning the proposed Section 232 tariffs for robotics and industrial equipment, as we currently understand the scope, it does not cover equipment related to food production. Consequently, while we may experience minor component cost increases, we do not foresee a significant impact on JBT Marel. As we continue integrating JBT and Marel into a single entity, the distribution of revenue and expenses between the legacy companies is becoming less significant. Therefore, in the fourth quarter of 2025, we plan to roll out our new segment reporting that aligns with our operating structure. The new segments will be Protein Solutions and Prepared Food and Beverage Solutions. Protein Solutions will encompass the JBT Marel businesses concentrating on the early stages of processing and harvesting animal proteins. The Prepared Food and Beverage Solutions segment will largely focus on the downstream value-added preparation, preservation, and packaging of foods and beverages into ready-to-eat or drink products. To ensure comparability, we will revise historical annual results for 2023 and 2024 and quarterly results for 2025, making these historical financials available prior to our fourth quarter and full-year earnings release. In terms of our segment results for the third quarter, JBT segment revenue was $465 million, an increase of about 2% year-over-year and sequentially. JBT segment adjusted EBITDA stood at $71 million, down 13% year-over-year and sequentially, with an adjusted EBITDA margin of 15.3%. The decline in margins can be attributed to an unfavorable mix of equipment, one-off project variances, and an increased share of corporate-related costs in the JBT segment. Marel segment revenue for the third quarter reached $537 million, marking a 12% sequential increase. Marel's adjusted EBITDA was $100 million, reflecting a margin of 18.6%. Marel's strong profitability this quarter resulted from a favorable mix of higher-margin poultry equipment, integration synergies, volume leverage, and continued improvements in the fish and meat sectors. Over the first nine months of 2025, we generated $224 million in operating cash flow and $163 million in free cash flow. For the third quarter, we achieved a record operating cash flow of $88 million for the combined company. We are making substantial progress in reducing our debt. From an initial leverage ratio of 4x at the close of the combination, our financial leverage decreased to 3.1x by the end of the third quarter, and we expect it to be below 3x by year-end. As announced earlier this quarter, we successfully issued $575 million in senior convertible notes with a coupon of 37.5 basis points maturing in 2030. These notes will help pre-fund the upcoming maturity of the May 2026 convertible notes at a lower interest expense compared to high-yield debt. With the call spread, we have effectively minimized shareholder dilution until the share price reaches approximately $283. As Brian mentioned, we've raised our guidance for the full year 2025 to reflect our strong third-quarter performance. We expect revenue to be between $3.76 billion and $3.79 billion, including an estimated $70 million to $85 million in favorable year-over-year foreign exchange translation effects. We are forecasting a full-year adjusted EBITDA margin of 15.75% to 16% and an adjusted EPS of $6.10 to $6.40. For the full year 2025, we now anticipate in-year synergy savings of $40 million to $45 million, slightly above our previous target, and run rate savings of $80 million to $90 million as we close out the year. We remain on track to achieve an annual run rate savings of $150 million within three years of the combination. Now, I will hand it over to Arni, who will discuss the progress and benefits we are experiencing due to the business combination and integration.

Thanks, Matt. It is clear that our results demonstrate the benefits of JBT Marel's complementary solutions, diverse end market participation, increased scale and continuous improvement efforts. As Matt said, we have increased our estimates for in-year realized synergy savings, a testament to the disciplined execution of our integration plan and the dedication of our team. For example, on the supply chain side, we are actively realizing synergies by rightsizing our supplier base and optimizing our procurement strategies as JBT Marel. That is with the goal of improving terms, quality, delivery and pricing. We recently renegotiated our air and ocean freight contracts, reducing the number of suppliers from more than 150 to 5. Given these efforts, we expect to capture more than $5 million in annualized cost savings, a very meaningful number. Following the implementation of our new organization in the second quarter, we have also continued to capture operating expense savings. This includes consolidating contracts, the sales and service office footprint and third-party spend across our finance, legal and IT departments. During the quarter, we inaugurated a new global production center in Pune, India, with a full new JBT Marel branding. The location positions India as a key export hub and brings JBT Marel's application expertise to the broader Asia Pacific region. Our global scale provides the flexibility to produce products in the region where our customers are located, adding optionality as tariffs continue to evolve. We now have dedicated low-cost manufacturing platforms in Asia, Latin America and Eastern Europe to support in-region profitable growth. As we outlined in our last call together, JBT and Marel are an even more valuable partner to our customers. We achieved that with our customer-centric approach, which features account managers representing the entire portfolio, our expanded service network and full-line solutions and process know-how across the value chain. We can simplify the buying process, installation and service for our customers and provide a single accountable vendor. In our conversations with customers at trade shows and on specific projects, it is clear that they recognize the value of our expanded capabilities. A good example is a recently secured hamburger line order, which includes meat preparation, forming, weighing, lean measurement, freezing and software from the JBT and Marel portfolio. Sustainability also remains top of mind for the food and beverage industry. At JBT Marel, sustainability is embedded in who we are as an organization. During the third quarter, we published JBT Marel's first joint sustainability report. In it, we discussed how we deliver sustainable and efficient outcomes for our customers through application expertise and leading technology, and that focuses on minimizing food and package waste, lowering energy and water usage and improving food traceability and safety. I am proud of JBT Marel's role in advancing sustainability as we transform the future of food. With that, let me turn the call back to Brian.

As you heard from Arni's remarks, we are making excellent progress on the integration and have delivered quantifiable benefits in terms of supply chain and operating expense savings. And there is more to come as we enhance our holistic solution offerings with an emphasis on service and digital capabilities. For example, as we have discussed over the past several years, our software and digital platform further enhance JBT Marel's value proposition, providing control and connectivity that improve performance across the system and optimize machine yield, throughput and uptime for our customers. Similar to our equipment portfolios, JBT and Marel's digital ecosystems are complementary. We have now combined our digital teams and have aligned our technology infrastructure platform. We continue to work on how to integrate the customer software interface, feature content as well as the development of the intermediate-term technology roadmap. Our goal is to provide a path forward that offers the best technology specifically designed for the needs of the food and beverage industry without disruption to our customers. We are also engaged in the process of integrating our service resources and capabilities. And in addition to leveraging our expanded reach, core to our strategy is continually enhancing the quality of our service offering and as such, are instituting a rigorous customer-facing performance measurement system. We recognize that an essential part of the JBT Marel value proposition is the reliability, responsiveness and quality of our service and parts offering and strive to provide customers with best-in-class performance. This development of our software solutions and the performance of our service and parts franchise go hand in hand as we further our integrated value proposition with our customers. As we approach the end of our first full year as JBT Marel, I believe our commercial success and financial performance have reinforced our conviction that we are better together. Our complementary portfolio of solutions, enhanced service capabilities and global footprint are making us an even more valuable partner to our customers. Internally, we have continued to optimize our operating efficiency and productivity. And our strong cash flow has enabled us to quickly delever our balance sheet and provides the liquidity to support our growth strategy. My heartfelt thank you to our teams around the globe who have enabled JBT Marel to bring greater value as we transform the future of food. Now let's open the call to questions.

We'll take our first question today from Mig Dobre at Baird.

Joe Grabowski on for Mig this morning. So I wanted to start with the Marel EBITDA margin in the quarter, really impressive, actually 330 basis points over the core JBT EBITDA margin. And even if we back out all of the $14 million in synergies from Marel, it's still above core JBT. I know you mentioned in the prepared remarks, favorable mix and some improvement in meat and fish, but maybe drill down a little further as to what's driving that EBITDA margins much higher than where they were pre-acquisition.

We're very proud of the performance of the legacy Marel business in the third quarter. We processed a significant volume through the system during this period, which resulted in substantial operating leverage. This was the primary benefit we observed. Additionally, the enhanced share synergies and the reduction in corporate overhead have positively impacted the Marel segment, with continual improvements in meat and fish. Over the past two years, we've discussed the strength of the Marel technology, which is becoming evident as volume increases and the market improves. This has become particularly noticeable in the quarter. There were numerous opportunities to enhance Marel margins, and we saw excellent execution on both the commercial and factory fronts.

Got it. Okay. Great. That's very helpful. My second question is regarding the increase in your full year EBITDA guidance at the midpoint by $20 million. It seems that Q3 possibly exceeded your expectations by at least that amount. Could you discuss some of the variables for Q4? You had additional revenue from backlog in Q3. Will that affect Q4? Also, could you touch on tariffs, synergies, and other factors impacting Q4 compared to your expectations from 90 days ago?

Sure. I'll talk a little bit about the commercial side and have Matt talk about the cost side. So we do expect lower revenue in the fourth quarter relative to the third quarter. So some of the cadence and the flow-through of that operating leverage and the profits on that lesser revenue flows through. The primary reason for that is we did have a bit of a pickup in the third quarter just as it relates to -- as I mentioned, some productivity and supply chain improvements. So there were some things in, I'll say, in our backlog that were stuck on the port because of some of the issues with tariffs and whatnot. We cleared a lot of that up. So that allowed us to get a little bit extra volume in the third quarter that we don't expect in the fourth quarter. And on the cost side?

Yes. I think on the cost side; we do expect to see a bit of a ramp on the tariff expense impacting margins in Q4 with additional 232 tariffs that should have an unfavorable impact on margins sequentially. In addition to that, as Brian said, we did see some supply chain benefits that impacted Q3. We don't expect that to recur in Q4. So there's a little bit of sort of a one-time impact from those supply chain benefits that doesn't recur sequentially in Q4.

And then just lastly, as we think about 2026 and thinking about our growth trajectory for there, we will make a little bit of investments in preparation and in commensurate with that expected growth.

Got it. Okay. And if I could maybe just sneak in one more. If you could talk about just how automation is trending through the business as we progress through the year?

Automation is a significant focus for us, especially in the protein sector, as we navigate challenges in the labor market for food production facilities. We have identified substantial opportunities in this area and noticed a strong volume of orders in the third quarter, which we anticipate will continue into the fourth quarter. This primarily relates to processes like slicing and dicing or separating meat from bones. It represents the greatest potential in the protein segment. We are also facing similar labor availability issues when it comes to processing fruits and vegetables, where tasks require dexterity and precision. However, as technology advances and our combined product offerings improve, we are well-positioned in this secondary market. This is unfolding as we expected.

Next question today comes from the line of Ross Sparenblek at William Blair.

Maybe just starting with the order book. Can you give us a sense of any cross-selling orders to call out and maybe help us size that as we think about the revenue synergy capture?

Yes, this is Arni. I want to say that we continue to see improvements in our pipeline regarding cross-selling opportunities, and we feel very positive about our current position. I highlighted one specific order in my prepared remarks, which involved a hamburger line. As we examine our pipeline and the opportunities available, we are very satisfied with the mix we are seeing. We have current JBT customers who are not Marel customers but are engaging with us, and we see similar opportunities in the opposite direction. A main theme is that the freezers are being bundled into some of our convenience lines, and we also see many fryers combined with mass ovens, particularly on the Marel side. Overall, we are quite pleased with our progress in the pipeline.

Okay. Do you get the sense that the scope has expanded beyond just the obvious advantages in the poultry sector?

Yes, I would say it is generally in line with expectations. We have been particularly focused on the poultry market due to its strength and our position within it. For instance, the combination of the DSI water cutter and the SensorX bone detector has proven to be effective. Additionally, we are witnessing broader developments, including unexpected sales of FTNON equipment in the fish industry. Such occurrences are not something we plan for. Overall, I would say everything is broadly aligned with expectations, and we are pleased with our ongoing efforts to strengthen our pipeline.

And just to add to that a little bit, as we mentioned in previous quarters that as we move to this account management model, which allows our sales force to sell the entire portfolio, over the last two quarters, there's been a tremendous amount of discovery of the legacy Marel salesmen, understanding the depth and the breadth of the JBT portfolio and vice versa. So as that discovery occurs and you start to experiment and realize that there's applications that we can apply that we hadn't even thought of, that is starting to come through. So we're feeling really good about the cross-selling and the synergistic sales as we go into 2026.

Maybe one more in here. Brian, when we last spoke last quarter, it sounded like you had 12 months of visibility in poultry, and if you take the share gains out of it and just think about end market demand. Where is your visibility today? And what are you hearing from your customers as it pertains to pork, fish and the other protein markets as well?

Right. So I would say that strength we still see continuing well into 2026. It's hard to precisely say how long that's going to last. But for sure, the market is strong. And really, what we're seeing is, I think we've talked about quite a bit is, again, and it's not just poultry, we're seeing some improvements in pork and fish, but poultry does continue to lead the market. But again, as we see the cash flow and the strength in our customers, they do have a fair amount of, I'll say, longer-term plans to get the benefits of greenfields and line expansions, et cetera. There were many, a couple of years of deferred investments. So we do see that coming through here in 2026. And frankly, we're already quoting into 2027.

Our next question today will come from Saree Boroditsky from Jefferies.

Starting off, building on the Marel margin question. One of the items you highlighted was improvement in meat and fish. I believe those product lines had lower margins at the time of acquisition. So just curious if you could provide some color on the improvement there and some of the actions you're doing to raise the margins.

Yes, as we've mentioned before, one of our key focuses has been the 80/20 analysis. This involves identifying the top 20 products that account for 80% of our volume, and examining these through various lenses such as geography, customers, and products. This process helps us understand where we are well positioned, where we have the right resources and margins, enabling us to take the necessary actions and allocate resources to different value streams effectively. We have learned to determine the appropriate level of resources needed. Additionally, we are assessing projects that face challenges, particularly where there are variances between expected and actual outcomes. We are taking the right steps in those areas too. Our primary focus is on improving profitability rather than simply boosting top line growth, as we want to establish a solid foundation before expanding on that profitable base. This strategy aims to avoid the pitfalls of constantly growing an underperforming business. It’s encouraging that we are building this foundation as the market begins to stabilize and slowly improve. We saw some improvement in the third quarter, and we are confident in our path to achieve mid-teens margins for those businesses by 2027.

I appreciate the color on those. I think you've mentioned a couple of times 2026, you mentioned investing ahead of growth along with the support of backlog. So could you just talk through any early thoughts on the growth outlook for 2026 and your visibility into this?

It's a bit early to discuss revenue and growth expectations for 2026, but I can share that we have good visibility due to the strength of our backlog. As mentioned earlier, the markets are generally supportive, with some being stronger than others. Overall, there is a healthy demand environment. Therefore, we anticipate 2026 will be a year of growth, and we will provide more details on that.

Yes. Just to build on that. I mean, where we're at with our backlog as we exit Q3, that coupled with where we see our order pipeline and the strength and resiliency of our recurring revenue. As we exit Q4, we're expecting to have visibility above 70% to the 2026 revenue. And that, as Brian said, is inclusive of growth in 2026. So we feel very good about sort of where our pipeline and backlog sits to support a growth year in 2026.

And I could squeeze one more in. Obviously, you're going to be reporting in two different segments. Just curious how those two categories differ from a growth and margin perspective or just any differences in how they go-to-market?

They will be relatively similar in size and margins. We are currently working through all the details, so I don't anticipate significant differences. Generally speaking, Protein Solutions will be more aligned with our legacy Marel business, while Prepared Food and Beverage Solutions will lean more towards our legacy JBT business. However, both segments should maintain decent margins and an overall growth profile. We will provide more details on this. As Matt mentioned in the prepared remarks, prior to releasing our 10-K and Q4 earnings, we will share all of this information so you can be fully informed as we approach that earnings call.

Our next question today will come from the line of Walt Liptak at Seaport Research.

I wanted to ask about selling prices and just kind of the tariffs. I wonder if you could talk first about third quarter and if you could parse out kind of the volume versus price that you got for JBT and Marel. And how are you guys doing like the fourth quarter headwind with tariffs? Is that surcharges? Or is that special tariff pricing? How does that work?

Sure. First of all, I want to highlight that the revenue in the third quarter primarily came from volume. There was some benefit from pricing due to price increases we implemented in the second quarter in anticipation of the impact from the tariffs. Additionally, we experienced some foreign exchange benefits year-over-year, which we've noted, but the main driver in the third quarter was volume. As we move into the fourth quarter, we will face an additional $5 million in costs related to the Section 232 incremental tariffs. Things appear to be stabilizing for now, barring any new developments. We are actively incorporating current tariff information into our project pricing. We'll monitor any potential additional cost issues closely, but we've already executed a price increase and believe we are well-positioned, which is reflected in our fourth-quarter guidance.

Okay. Great. It sounds like you're making more permanent shifts with the manufacturing footprint. Have you started those? What is the timing for that? And what is the timing for any unexpected benefits?

Yes, we have started. This process will take some time overall. However, we have sister plants; for instance, on the poultry side, we have a facility in Boxmeer, Netherlands, with a sister plant in Gainesville, Georgia. This gives us an established supply chain, allowing us to move more volume than we would be able to otherwise in the absence of tariffs into Gainesville. That is already happening and is relatively easier in the grand scheme of things. Long term, we are looking at ways to utilize and further develop that supply chain for some of our other facilities. This will take two to four quarters to fully implement as we consider our options. It’s a combination of actions we can take quickly and others that will require a few quarters.

And next, we'll hear from the line of Justin Ages at CJS Securities.

Shifting topic slightly. I know it's smaller, but any update on the AGV business? How is it doing? How you guys are thinking about that business?

Sure. Yes. So as you know, the AGV business is in a tremendous market in terms of all the trends as we see on factory automation, warehouse automation is their big end markets. So longer term, very, very strong. The third quarter wasn't their best quarter. That was one of the businesses that was more affected by some of the tariffs and some handful of delayed orders and revenue. However, we're expecting a strong fourth quarter here in terms of demand and into 2026.

I appreciate the color. And then one more on the tariff mitigation. I know you've had some price increases out there for a bit. Are you seeing any pushback on repricing, any order cancellations or anything along those lines?

We've been very balanced in understanding our customers' perspectives. As you've noted, we are absorbing some of the tariff impact, which reflects our fairness to them. Our orders continue to be strong, indicating that we have effectively shared some of the burdens. Looking ahead to 2026, we are confident about our standing with our customers.

And that was our final question from the audience today. Mr. Deck, I will turn it back to you, sir, for any additional or closing remarks that you have.

Great. Thanks, everyone, for joining us today. As always, if there's any questions, please direct them to Marlee Spangler. Have a great day.

Thank you, ladies and gentlemen, for joining today's session. You may now disconnect your lines. Have a great day.