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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, 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 billion, revenue of $3.5 billion, and adjusted EBITDA of $479 million, representing an adjusted EBITDA margin of 13.7%. In 2025, we are forecasting full year revenue growth on a constant currency basis of 4.5% to 6.5%, which excludes a projected negative foreign exchange impact of approximately $75 million or 2% due to the recent strength in the U.S. dollar. We are guiding to adjust EBITDA margin of 15.75% to 16.5% in 2025, which represents more than 200 basis points of improvement. We expect to realize cost synergies of $35 million to $40 million in 2025 and exiting the year estimate achieving run rate synergies of $80 million to $90 million. For the full year, we are projecting adjusted EPS of $5.50 to $6.10, includes certain one-time items and acquisition-related costs, which were outlined in yesterday's press release and investor presentation. For the first quarter of 2025, we expect revenue to be in the range of $820 million to $850 million inclusive of an estimated negative $23 million of year-over-year FX translation impact. The first quarter is historically JBT seasonally lightest. For Marel, pickup in orders occurred in late 2024. And given the large project nature of its business, the conversion time from order to revenue is longer. We are forecasting adjusted EBITDA margins of 12% to 13% and adjusted EPS in the range of $0.70 to $0.90. On the balance sheet, we expect CapEx of $90 million to $100 million for the year. Starting leverage post-merger was just under 4x, which excludes the benefit of any projected synergies. We continue to expect to delever to below 3x by year-end 2025 due to higher adjusted EBITDA, which includes realized cost synergies and strong cash flow generation. Let me turn the call back to Brian for some concluding remarks.

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?

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?

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.

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.

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.