JBT Marel (JBTM) Q1 2026 Earnings Transcript

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DATE

Tuesday, May 5, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Brian Deck
• Chief Strategy Officer — Arni Sigurdsson
• Chief Financial Officer — Matthew Meister

TAKEAWAYS

• Orders -- Exceeded $1 billion for the second consecutive quarter, representing a 17% increase year over year, with "double-digit year-over-year growth from both our Protein Solutions and Prepared Food and Beverage segments."
• Revenue -- $936 million, up approximately 10% year over year, with organic growth of 4% and foreign exchange contributing an additional 6%.
• Adjusted EBITDA -- $142 million, up 27% year over year, and a margin of 15.2%, a 210 basis point improvement.
• Protein Solutions Segment Revenue -- $460 million, up 22% year over year, with 8% of that growth from foreign exchange and a segment adjusted EBITDA margin of 21.7%, reflecting more than a 500 basis point improvement.
• Prepared Food and Beverage Solutions Segment Revenue -- $476 million, flat year over year with a 4% positive foreign exchange impact, and a segment adjusted EBITDA margin of 14.7%, down by 170 basis points.
• Free Cash Flow -- $100 million generated, resulting in a 70% free cash flow conversion to adjusted EBITDA, "driven by our earnings performance and an increase in customer advance payments."
• Leverage Ratio -- Reduced to 2.6x at quarter end, with a stated target of approximately 2x by year-end.
• Full-year 2026 guidance -- Maintained, signaling 6% revenue growth at the midpoint, adjusted EBITDA margin expansion of 145 basis points, and a 29% adjusted earnings per share improvement.
• Q2 2026 Outlook -- Anticipates revenue of $975 million to $1 billion and adjusted EBITDA margin of 17% to 17.5%.
• Tariffs -- The expected benefit from IEEPA tariff elimination is "essentially offset by incremental Sections 122 and 232 tariff increases," leading to an unchanged full-year forecast and a continuing 25 to 50 basis point headwind after mitigation.
• Organic Revenue Growth Outlook -- Company targets a 3-year organic compound annual growth rate of 5%-7% and an adjusted EBITDA margin of 20% by 2028.
• Segment-Specific Demand Trends -- "Protein Solutions organic growth was primarily due to higher poultry volume," while Prepared Food and Beverage Solutions saw "softness in the CPG end market" and persistent warehouse automation headwinds.
• Geographical Momentum -- Management cites "sequential increase in demand from Europe, North America and Latin America." South America may be on track for a "record year," while Asia is "not as quite strong" but offers opportunities.
• Synergy Capture -- Management highlights "further synergy savings," commercial execution, and cross-selling between the legacy JBT and Marel businesses as drivers of performance.
• Poultry Market Dynamics -- North America is characterized as "even a little earlier in the cycle than the European cycle," with long-term investments tied to possible regulatory changes on line speeds.

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RISKS

• Prepared Food and Beverage Solutions Margin -- Margin declined 170 basis points year over year due to "the expected impact of higher tariff costs, the volume decline and underperformance in our warehouse automation business."
• Tariff Headwinds -- Adjusted full-year guidance includes a "25 to 50 basis point headwind from tariffs after all mitigation actions."
• Warehouse Automation Demand -- The segment "Well, I think in warehouse automation specifically, that business had a bigger impact from the tariff changes on its customers than the rest of our business did. So they've been really impacted by demand because of the impacts on its market. And they've also had a few discrete projects that they've been working through over the last 2 quarters," signaling demand softness and project-specific drag.

SUMMARY

The call established that JBT Marel Corporation (NYSE:JBTM) maintained strong order momentum and margin expansion, underpinned by tangible progress on integration, synergy captures, and cross-segment demand. Leadership emphasized that revenue, adjusted EBITDA, and cash flow improvements stemmed from robust poultry demand, successful cost management, and commercial discipline. Strategic clarity was provided through detailed targets for organic growth, EBITDA margin, and leverage, while segment and regional performance highlights supported management’s reaffirmed guidance despite identified headwinds.

• The NextGen strategy is structured to drive “profitable growth and continued margin expansion through 2028,” with innovation, service enhancement, and disciplined M&A forming the main pillars.
• Management said, "we have not seen an impact to broader customer investment trends in Europe as the demand to meet the needs for protein output, automation and efficient operation continues," even amidst the Middle East conflict.
• Guidance does not incorporate any potential IEEPA tariff refunds, suggesting possible upside if circumstances change.
• Leadership noted order pipeline strength and backlog building for Prepared Food and Beverage Solutions, forecasting sequential and year-over-year margin improvement during the remainder of 2026.
• The North American poultry sector is described as “earlier in the cycle,” with investments potentially accelerating once pending USDA line speed decisions are finalized.

INDUSTRY GLOSSARY

• IEEPA tariffs: U.S. tariffs imposed under the International Emergency Economic Powers Act, here referring to previous duties eliminated with offsetting tariffs cited.
• CPG: Consumer Packaged Goods; refers to companies producing packaged food and non-food consumable products.
• AGV: Automated Guided Vehicle; self-guided systems used for material movement and warehouse automation.
• Line speeds: The rate at which poultry (measured in birds per minute) move through a processing line, critical for capacity and regulatory compliance.

Full Conference Call Transcript

Brian Deck: Thanks, Marlee, and good morning, all. We got off to a solid start in 2026. We demonstrated our commercial momentum with a second consecutive quarter of orders exceeding $1 billion, including continued robust global demand from our poultry customers. We captured meaningful year-over-year margin expansion, enabled by further synergy savings and strong execution. Additionally, cash flow was extremely strong, allowing us to make further and significant progress in reducing our financial leverage. As a result, we remain confident in delivering our original earnings guidance for the year. Before we talk more about the first quarter, I'd like to thank everyone who was able to participate in our Investor Day in late March.

It was an important milestone for JBT Marel as we unveiled our NextGen strategy and detailed our 2028 financial targets. And as we discussed, we are very pleased with our progress integrating JBT and Marel, which underscores the commercial, operational and financial benefits of the combination, and provides confidence in the journey ahead. I'll now turn the call over to Arni to provide details about our NextGen strategy, then Matt will follow up with a financial recap of our first quarter performance.

Arni Sigurdsson: Thank you, Brian. At our Investor Day in March, we detailed our plans for profitable growth and continued margin expansion through 2028. Our food and beverage customers are shifting to an outcome-based model that increases the demand for integrated solutions across the value chain and requires full life cycle support, high uptime, and data and processing insights to run at the highest performance level. JBT Marel is uniquely positioned to deliver these comprehensive solutions, and our NextGen strategy will strengthen our competitive position even further.

The key pillars of the NextGen strategy are, first, advancing our customer-centric service model by building on our large global installed base to deliver a better customer experience through prescriptive maintenance, improved parts delivery performance and more regional accountability. Second, it is enhancing our product offering, full-line solutions and digital capabilities with targeted innovation through our food application expertise. Third, it is capturing commercial opportunities through cross-selling and growth in emerging markets, and delivering end-to-end solutions that optimize customer performance. Then, of course, our culture of continuous improvement will further enhance the efficiency of JBT Marel, allowing us to invest in the business and be more competitive.

And finally, at the right time, we plan to pursue strategic and disciplined M&A to build an even more comprehensive offering and strengthen our value proposition of integrated line solutions. Putting this all together, we expect our revenue to grow at a 3-year organic compound annual rate of 5% to 7%, and we are targeting an adjusted EBITDA margin of 20% in 2028, supported by our margin enhancement initiatives and volume growth. We're confident that our strategy positions us to deliver profitable growth and value creation for both customers and shareholders, and we look forward to updating you on our progress. Now let me turn the call over to Matt to discuss our performance in the quarter.

Matthew Meister: Thanks, Arni. As Brian mentioned, we're off to a good start in 2026. Our first quarter consolidated revenue was $936 million, an increase of approximately 10% year-over-year. Organic revenue growth was 4%, with foreign exchange contributing an additional 6%. Consolidated adjusted EBITDA of $142 million improved 27%, and adjusted EBITDA margin of 15.2% improved by 210 basis points. From a significant -- from a segment perspective, Protein Solutions revenue of $460 million grew 22% year-over-year, which included an approximate 8% benefit from foreign exchange. Organic growth was primarily due to higher poultry volume as we executed on strong backlog built in 2025. Protein Solutions segment adjusted EBITDA margin improved by more than 500 basis points year-over-year to 21.7%.

This significant improvement was driven by large -- by volume leverage in poultry and the results from synergies and continuous improvement initiatives in our meat and fish businesses. Prepared Food and Beverage Solutions segment revenue of $476 million was flat year-over-year, which included an approximate 4% benefit from foreign exchange. As we've discussed on previous calls, we experienced softness in the CPG end market during 2025, which contributed to the lower volume. Adjusted EBITDA margin for the segment declined 170 basis points year-over-year to 14.7%, which included the expected impact of higher tariff costs, the volume decline and underperformance in our warehouse automation business.

For the quarter, we generated free cash flow of $100 million, driven by our earnings performance and an increase in customer advance payments from our strong order intake. This resulted in free cash flow conversion to adjusted EBITDA of 70%. We continue to make great progress deleveraging our balance sheet with our leverage ratio at 2.6x at the end of the first quarter, and we remain on track to reduce leverage to approximately 2x by year-end. Given our first quarter performance and strong orders, we are maintaining our full year 2026 guidance. At the midpoint, that reflects revenue growth of 6%, adjusted EBITDA margin expansion of 145 basis points, and an adjusted earnings per share improvement of 29%.

For the second quarter, we anticipate revenue of $975 million to $1 billion and adjusted EBITDA margin of 17% to 17.5%. Now regarding the impact of tariff changes on our guidance. We are forecasting that the benefit from the elimination of IEEPA tariffs will be essentially offset by incremental Sections 122 and 232 tariff increases. Additionally, we have not factored in any IEEPA tariff payment refunds. Therefore, our full year guidance remains unchanged and continues to reflect a 25 to 50 basis point headwind from tariffs after all mitigation actions. With that, let me turn the call back to Brian.

Brian Deck: Thanks, Matt. Speaking of the outlook for JBT Marel, let me comment on our commercial momentum. As I mentioned at the top of the call, orders exceeded $1 billion in the first quarter, a year-over-year increase of 17%. That gain reflects continued robust demand from our poultry customers globally, driven by unabated demand from end customers. And beyond poultry, the benefits of our diversified model are also playing out with broad-based order strength as we experienced double-digit year-over-year growth from both our Protein Solutions and Prepared Food and Beverage segments. Specifically, we saw a pickup in investment in Prepared Foods as well as the meat and fruit and vegetable end markets.

Geographically, investment was strong in most regions with a sequential increase in demand from Europe, North America and Latin America. Additionally, we continue to capture synergistic orders as our go-to-market strategy promotes cross-selling of legacy JBT and Marel solutions. As it relates to the conflict in the Middle East, we are not experiencing any noteworthy impact on our order book and pipeline. As a reminder, the Middle East region has historically accounted for less than 5% of total JBT Marel revenue. But even today, we continue to progress on opportunities in the region.

Moreover, we have not seen an impact to broader customer investment trends in Europe as the demand to meet the needs for protein output, automation and efficient operation continues. However, the conflict is resulting in a more challenging logistics, fertilizer and energy inflationary environment, which heightens our attention to any implication for these cost dynamics for both JBT Marel and our customers. So far, it seems our customers remain confident in their ability to pass these costs along or otherwise manage through them. With all this said, our teams are executing well despite the dynamic macro environment, which speaks well to our prospects for the remainder of 2026 and beyond.

Thank you to our talented people across the globe for making it possible. Now let's open the call to questions. Operator?

Operator: [Operator Instructions] Your first question comes from the line of Ross Sparenblek with William Blair.

Robert Samuel Karlov: This is Sam Karlov on for Ross. Really great to see the strong orders in the quarter. I mean, you kind of touched on this, but we have been hearing some concerns that input cost inflation may have been impacting our customers' willingness to order. Can you maybe walk through how this current inflationary trend compares to 2022?

Brian Deck: Sure. Happy to do so. So two things, I would say, first, specific to our poultry customers, they are in a much stronger position today versus a few years ago. With excellent customer demand, down supply, good price/cost spreads and strong balance sheets. More specifically, corn and soybean are in abundant supply and remain in that low-cost position here in 2026, versus high prices in 2022, which, if you recall, were exasperated by the Russia-Ukraine conflict. And wholesale prices for poultry today are -- while off its highs are still at a level where producers are making really nice money. And in part, you saw the Tyson report yesterday, a nice quarter.

And again, balance sheets remain strong, and there's still a continued bias towards investment in all the things that we've talked about. I'd also say from a -- specific to JBT Marel standpoint as a combined company, we really now have the benefit of a more diversified product portfolio within poultry because now we have primary, secondary, all the way to end of line and including a much deeper further processing portfolio, and we're seeing a lot of investment on further processing coming along. But also, remember, we've got much broader end market exposure outside of proteins, a better mix of recurring revenue, a broader geographic and a broader geographic exposure.

Additionally, if you recall, back in 2022, 2023, Marel meat and fish, they weren't really contributing much to the situation from an earnings perspective. And now while we've got a lot of room to go on those businesses, they're both contributing nicely. So we're simply more diversified financially as well. Really, what I'm saying is the combined benefits of the scale and diversification of both the product and the market side, we've severely derisked the company compared to where we were in the past. And that was a big part of the industrial logic of the two businesses coming together.

So while I'm not saying that we're immune to cyclical forces, I'm just saying we're a better business today and more diversified than we were back then.

Robert Samuel Karlov: Got it. That's super helpful. And kind of sticking on the same theme, has your ability to internally pass through your own inflationary costs meaningfully changed since 2022 following the Marel acquisition?

Brian Deck: I would say, generally, we're more competitive than we've ever been by virtue of just our continuous improvement efforts, and we have strong market positions. So yes, I think we do have a good ability to pass things along. We're obviously very conscious of where we sit in the marketplace from a competitive pricing situation. So that always comes into play. But certainly, we feel we're in a good spot generally.

Arni Sigurdsson: And maybe just to add a little bit because like if you look at, kind of maybe, more specifically to the end markets that Marel was focused on back in 2022, there was basically a perfect storm. There was like a headwind in most of our markets. If you look at the pork business, obviously, the war with the sanction on Russia and kind of the Ukraine market closing down, that was north of 10% of the meat business at the time.

But what was also happening, which was an extra headwind was that China really cut down on their imports of pork because they were built -- kind of China was building up the herd after the African swine fever. So there was an oversupply of pork in Europe and North America, kind of independent of what was going on from a cost standpoint. The beef cycle was turning at that point kind of to a more negative environment. And then on the fish side, you were seeing, quotas being cut for the first time for a few years on the white fish side.

And Norway introduced a 40% tax on salmon farming, which is close to 50% of the salmon farming in the world. So there was also just like a very specific dynamics if you were looking, kind of, more specifically at the model business back in the day. But like Brian said, we're a different company and much stronger from a scale, from a diversification standpoint. Not only from an end market standpoint, but also across kind of the value chains in those end markets.

Operator: Your next question comes from the line of Justin Ages with CJS Securities.

Justin Ages: I was hoping we could get a little more color on some of the headwinds in Prepared Food and Beverage Solutions. What's causing these persistent headwinds in warehouse automation?

Matthew Meister: Well, I think in warehouse automation specifically, that business had a bigger impact from the tariff changes on its customers than the rest of our business did. So they've been really impacted by demand because of the impacts on its market. And they've also had a few discrete projects that they've been working through over the last 2 quarters. We think that's largely behind us now. And the business is taking some actions to try to address the lower volume and improve margins going forward. And we should expect those actions to start to impact late here in Q2, and then going on in Q3 and Q4.

Justin Ages: Thanks for that Matt. And then switching to poultry, good to see strong robust demand. Is it possible to get a little more color on where that is geographically? Is it broad-based in all your regions? Is it specifically in one region, leaving an opportunity to grow more in another region? Just looking for any color there.

Brian Deck: Sure. So the demand is fairly broad-based. The -- Europe is strong. North America is, I would say, even a little earlier in the cycle than the European cycle, and we expect continued demand there, especially with some of the opportunities with line speeds and whatnot. So I would say they're actually earlier in the cycle than Europe. And South America is very strong for us right now. We may have a record year -- this year down there. I would say Asia is a little earlier, or a little -- not as quite strong. But good opportunities, especially in the Australia, New Zealand area.

Operator: [Operator Instructions] Your next question comes from the line of Mig Dobre with R.W. Baird.

Mircea Dobre: Brian, just maybe, tacking on to those last comments that you had on poultry. I'm sort of curious as to what your visibility is here at this point, right? I mean we -- just in speaking with investors, I think this is kind of like the primary concern that we've had a pretty decent poultry cycle here going for more than a year. And the question is kind of on sustainability. Maybe you can talk a little bit about that and what you're hearing from customers. I mean what is driving this investment?

And can you put a finer point on what's happening with the line speeds in terms of how that manifests itself in incremental business for you guys in terms of orders either for 2026, or maybe even beyond 2026?

Brian Deck: Sure. From a demand profile, there's a couple of things happening and this is global. There is a true insatiable demand for poultry right now just in terms of all the benefits that go along with incremental -- the protein aspect to it, the flexibility and flavor profiles, the religious -- I'll say, no restrictions there. As well as the continued progression of people going from grain-based diets to meat-based diets. So those secular tailwinds continue to benefit, and I think that will go on for a long time.

And now that the -- I'll say that the industry got the supply-demand balance fixed after their strugglous 2023 through '22 -- to early 2024, we're just in a, I'll say, more normal cycle in that regard. And I would further say that the most recent, I'll say, demand real strength has been on that primary and secondary side, which is really supporting automation, but also just the pure volume needs for the industry. As we go further into the cycle, what we're now seeing is the need and desire for some of the downstream further processing.

You heard that a little bit from Tyson yesterday, where there's -- we do expect some real strength there here later in the cycle as they look to do value-added to their portfolio and because they make more money in that regard. So I do think that we're going to see some strength in that side over the next several quarters. Sorry, what was the second part of the question?

Matthew Meister: Line splits.

Brian Deck: Line speeds and line splits. Yes. So we're still waiting for the USDA to make final determination, which we expect here in the next few months. The open comment period has now since closed. We met with the USDA giving our opinion on the matter and put forth our comments. And our position on this is that our technology and the line speeds, they're built for the higher line speeds, which we currently use in Europe and elsewhere. And really the line speeds in North America are a constraint on productivity and -- it actually increases food costs.

So -- but what would manifest if we see some success on the line speed rules is immediately go from 140 birds per minute to 175, and that would precipitate investment all around -- you don't just turn the switch and make it go faster. The entire system has to be harmonized in order to get the productivity that you need in order to execute on that. So the shackle lines themselves, but everything around that. The deboning, everything associated with that, we think that's an opportunity.

And even without, I would say, the waivers, we are still seeing demand for line splits, which effectively allows the increased speeds under the current rules of 140 birds per minute where you split the line where the USDA inspection occurs to slow it down for a period and then you join those lines back up. So we actually had a deployment in Q1 in that regard. So that was nice to see. One of our customers deploying that. So we do think independent of what the USDA decides, we think there's some opportunity to invest, which will allow our customers to get that productivity regardless.

Mircea Dobre: Okay. Is it fair to think about this line speed issue as just kind of fundamentally altering the poultry investment cycle in North America? Or is this something that perhaps doesn't really have that much of an impact in -- for the overall guidance I'm talking about here?

Brian Deck: This is one of the reasons why I mentioned we're earlier in the cycle in North America compared to Europe because Europe has been up these higher speeds. I think this is a multiyear investment opportunity because of the 300 or so processing lines out there, only handfuls are running at higher speeds. So we do think this is a longer cyclical tailwind specific to North America.

Arni Sigurdsson: It is kind of -- how you think about it is kind of a transformation because all the infrastructure around, kind of, the farming side, ensuring supply and the current facilities are not necessarily set up in the right way to deal with the -- kind of the technology that you need and the speed and so on. So it will be kind of a gradual kind of shift in the market, we believe. So it is not -- like Brian said, it's not like you buy one piece of equipment and you swap it out. It's really -- you need to think about it much more broadly.

So it has -- it will take time to progress over the whole industry.

Mircea Dobre: That's very helpful. And maybe one final follow-up on Prepared Food and Beverage segment. It sounds like demand is getting a little bit better. You talked about some challenges in '25, but demand gets a little bit better. How should we think about organic growth here in terms of what's embedded in guidance? Maybe you can comment on Q2 specifically and then the rest of the year as well? And how do we also see margin progress? We started clearly slower in Q1. Do we revert to some year-over-year margin expansion at any point in time in fiscal '26?

Brian Deck: Sure. I'll speak and then let Matt talk specifically about some of the trends here. But we are seeing some, I'll say, recovery in some of those end markets that were a little bit more challenged in 2025. So some of the CPG, QSR, we are starting to see improved pipeline and that manifested in stronger orders in Q1, which is nice to see.

Matthew Meister: Yes. Just to add on that, I think we saw close to double-digit order improvement in Prepared Food and Beverage in Q1. So that's the positive momentum that we're seeing in the segment overall. From an organic growth rate, it will be sort of in that, call it, sort of mid-single digits, probably a little less than the average that we're looking at for the total business at 6%, if that's our midpoint. It will be higher in protein, a little bit lower on the Prepared Food and Beverage side, probably closer to 3% to 4%...

Brian Deck: Especially given the slow start, right?

Matthew Meister: Correct in Prepared Food and Beverage side. So that's why I would see it, but it's going to progressively improve because we have built some backlog here in Q1, and we're starting to see some positive momentum in their primary markets.

Brian Deck: And the margins?

Matthew Meister: Yes. And from a margin perspective, again, Q1 was certainly a bit lower than we expected. Certainly, we had some expectation with the AGV business, in warehouse automation being down, but that volume decline did have an impact on margins. But with the improved volume significantly in Q2 and Q3 and Q4, we should see sequential improvement going forward from Q1 all the way through the year. So I would expect to continue to see significant progress in Q2 and then sequential progress from there in 3 and 4.

Mircea Dobre: But to be clear, do you expect to be up margin-wise here? I understand the sequential comment. At what point in time do we get margins up year-over-year?

Matthew Meister: Yes. Margins will be up year-over-year in Prepared Food and Beverage. That is our forecast for that segment, yes.

Operator: There are no further questions at this time. I will now hand the call over to Mr. Brian Deck for closing remarks.

Brian Deck: Thank you all for joining us this morning. As always, our IR team will be available if you have any additional questions.

Operator: This concludes today's call. You may now disconnect.

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