管理層發言
Welcome to JBT Marel's Earnings Conference Call for the Second Quarter 2026. My name is Aaron, and I will be your conference operator today. As a reminder, today's call is being recorded. The operator will now provide instructions for the question-and-answer session. I will now turn the call over to JBT Marel's Senior Director of Investor Relations, Marlee Spangler. Please go ahead.
Thank you, Aaron. Good morning, everyone, and thank you for joining our second quarter 2026 conference call. With me on the call is our Chief Executive Officer, Brian Deck; President, Arni Sigurdsson; and Chief Financial Officer, Matthew 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 on the IR website. Also, our discussion today includes references to certain non-GAAP financial measures. A reconciliation of these measures to the most comparable GAAP measure can be found on our website. With that, I'll turn the call over to Brian.
Thanks, Marlee, and good morning all. First and foremost, we were very pleased with the continued robust demand environment in the second quarter. Orders increased 10% year-over-year and marked our third consecutive quarter with orders exceeding $1 billion reinforcing the strategic benefits of the JBT Marel combination. By bringing together our complementary technologies, we are strengthening our ability to serve customers around the world. Contributing to the gain was double-digit year-over-year growth in our Prepared Food and Beverage Solutions segment, which was led by our value-added Prepared Foods technology. The strong orders also reflect the success of our synergistic cross-selling initiatives. It is also clear that investment by the poultry industry remains solid and JBT Marel is uniquely positioned to benefit from investment across the entire poultry value chain from primary and secondary processing through further processing and end-of-line solutions, allowing us to capture growth wherever our customers are investing. At the same time, we continue to advance our cost synergy initiatives. As we have discussed previously, the majority of our synergy actions in 2026 and 2027 are related to supply chain and footprint optimization projects. As Arni will highlight, we have taken decisive actions to advance our footprint optimization strategy, allowing us to leverage our global scale and simplify our manufacturing and distribution network. And as Matthew will discuss, we are restructuring our warehouse automation business to optimize the cost structure and take advantage of product standardization to operate more efficiently. There were temporary and other factors that impacted our second quarter, which Matthew will discuss. Absent the net benefits of these factors, results fell short of our expectations in our Prepared Food and Beverage segment. That said, we remain optimistic about the short and long-term future of that segment. At the same time, we are thrilled with the continued profitable growth of the Protein Solutions segment. Taken together, our backlog visibility, integration efforts and continuous improvement initiatives gives us confidence in realizing our second half 2026 forecast and achieving our longer-term financial targets, including an adjusted EBITDA margin of 20% in 2028. Now let me turn the call over to Matthew to provide an analysis of our second quarter and guidance for the remainder of the year.
Thanks, Brian. Second quarter consolidated revenue was $981 million, an increase of 5% year-over-year, which was made up of 3% organic growth and 2% from foreign exchange. At the segment level, strong Protein revenue of $467 million grew 11% year-over-year, which was 8% organic and 3% from foreign exchange. Prepared Food and Beverage segment revenue was flat versus Q2 last year, which included an approximate 2% favorable impact from foreign exchange. Equipment revenue in the segment was short of our expectations due to a combination of logistics constraints and production inefficiencies resulting from our efforts to optimize our manufacturing footprint. At the same time, we are quite pleased with the segment's strong order and backlog growth. Second quarter consolidated adjusted EBITDA of $168 million was impacted by the timing of equipment shipments described above and the following discrete items not included in our forecast. We recognized $17 million of IEEPA tariff refunds, which was partially offset by $4 million in higher-than-expected tariff expense associated with the prior years and $5 million in accelerated long-term incentive compensation expense. We are operating in a higher inflationary environment as the pace of higher logistics, metals and other input costs put pressure on our year-over-year margins. That said, we have taken appropriate pricing actions to address these cost pressures. As mentioned, we are investing significant effort in optimizing our manufacturing footprint, primarily impacting the Prepared Food and Beverage segment. These efforts delayed some revenue recognition in the quarter and correspondingly weighed on margins. We believe this short-term disruption is part of the transition to lower-cost operations, which are critical to achieving our 2028 margin targets. At the same time, we took action to restructure our warehouse automation business. We have made significant progress in advancing our product standardization, enabling us to more efficiently deploy engineering resources and consolidate two facilities into one. These actions are expected to generate approximately $9 million in total annual savings, including approximately $3 million in the second half of 2026. While the Prepared Food and Beverage segment margins were disappointing, we expect meaningful improvement in the back half of the year, which is supported by our strong backlog visibility, pricing actions and operational improvement initiatives. Meanwhile, adjusted EBITDA margins in the Protein segment improved year-over-year, even excluding the benefit from tariff refunds, primarily due to volume leverage in our poultry business as well as benefits from our synergy and continuous improvement actions across the segment. During the second quarter, we also took a non-cash impairment charge to write off intangibles associated with the 2021 acquisition of Prevenio within the Protein segment. This impairment is a reflection of a shift in demand from Prevenio's value-added antimicrobial offering for poultry to a more commodity-based customer approach. Moving to the balance sheet. We generated $179 million in year-to-date free cash flow, representing a conversion to adjusted EBITDA of 58%. And with leverage at the end of the quarter just below 2.5x, we are pleased that we are now within our target range of 2x to 2.5x after just 18 months after the close. In terms of guidance, the actions we have taken in our operations are expected to improve production efficiency as we progress through the second half of the year. Therefore, we expect a steeper ramp in the fourth quarter results compared to the third quarter. For the third quarter, we are guiding to a year-over-year revenue growth of 2% to 4% organic, partially offset by a 1% FX impact. We expect adjusted EBITDA margins of 17% to 17.5%. Given our record backlog, which provides visibility to over 90% of back half equipment revenue, coupled with our resilient aftermarket revenue and operational improvements within the Prepared Food and Beverage segment, we are maintaining our full year 2026 guidance for revenue and adjusted EBITDA. At the midpoint, that reflects consolidated revenue growth of 6% and adjusted EBITDA margin expansion of 145 basis points. Finally, we have refined our adjusted EPS guidance to reflect updated assumptions for depreciation, amortization and our effective tax rate. With that, let me turn the call over to Arni.
Thank you, Matthew. As Brian mentioned earlier, we have made significant progress on cross-selling, allowing us to realize synergy orders of $45 million through the first six months of the year, and $75 million over the last 18 months. Many of our opportunities are in Prepared Foods, where we meaningfully strengthened our integrated offering through the JBT Marel combination. For example, we secured a multiline order with a leading poultry customer. We leveraged technologies from across the combined portfolio, including forming, coating, frying and heating, for branded fully cooked chicken distributed to the retail channels. This is a testament to the strategic benefits of the combination and to our enhanced value proposition with customers. Additionally, as discussed at the top of the call, we continue to take decisive actions to optimize our operating footprint. To date, we have announced facility consolidations with a total of approximately 1.3 million square feet. This includes approximately 1.1 million square feet of manufacturing and distribution space and 200,000 square feet of office space and represents, in total, an approximately 15% reduction of our global footprint. Nearly 80% of the manufacturing space reduction is associated with the Prepared Food and Beverage segment as we focus on that segment's full margin potential and other opportunities do remain. But for more than just the reduction in square footage, the footprint optimization allows us to take advantage of our scale, reduce complexity, and utilize low-cost operating capacity across our global network, such as in Eastern Europe, Brazil and India. As a result of these initiatives, we expect to record a cash benefit on the sale of real estate assets in 2027 or 2028. In terms of the P&L effect, we expect these initiatives will deliver annualized savings of approximately $25 million to $30 million by 2028, while exceeding our original estimated savings of $10 million to $15 million. Of these anticipated annual savings roughly $4 million to $5 million is embedded into our 2026 forecast. Let me now turn the call back to Brian.
Thanks, Arni. We are pleased with the progress we are making on our NextGen strategic initiatives. The strong market reception to our integrated and full-line solutions demonstrates the differentiated value proposition we provide to customers and our cross-selling capabilities. We are in the early innings of deploying our customer-first service initiatives, which combined with the global reach and digital offering, are expected to deepen customer engagement and support our goal of increasing our aftermarket wallet share. We continue to make progress on our cost synergy initiatives. As Arni articulated, one of the most significant benefits of the JBT Marel combination is the flexibility to leverage our global scale and relocate production from higher cost and underutilized facilities to our most efficient lower cost operations. These footprint optimization initiatives are just one of the many levers we have to capture the value-creating benefits of the business combination. Supply chain optimization is another pillar as we consolidate our purchasing and execute value-add engineering projects to lower the cost and complexity of equipment and achieve further standardization of parts and subcomponents. And while the tariff environment has made these efforts more challenging, it has also motivated us to accelerate the localization of the European supply chain to the U.S. to better serve the U.S. domestic market from a lead time and cost perspective. All told, we are demonstrating the industrial logic of the JBT Marel combination. This pool of opportunities enhances confidence in our ability to deliver our profitable growth objectives and our target of 20% adjusted EBITDA margins in 2028. Before we take your questions, I'd like to thank our team. It is their commitment and hard work every day that has enabled us to make such significant progress on the integration of JBT and Marel and positions us as a stronger partner to our customers around the globe. Now let's open the call to questions. Operator?
分析師問答
We will now begin the question-and-answer session. We will take our first question from Mig Dobre.
Just maybe a little bit of clarification on the guide and your thoughts here on Prepared Food and Beverage. I'm curious as to how you think about the margin cadence relative to what we have seen in Q2. So you've done 17.5% in Q2. How do we think about Q3 and Q4, given everything that you talked about in terms of footprint consolidation, and some of the challenges that you had in Q2? And then, is there some sort of a catch-up that we need to consider here in terms of revenue that got pushed out from Q2 into either Q3 or Q4? How do we maybe frame that as well?
Yes, Mig, it's Brian. I'll start and then I'll hand it off to Matthew to talk a little bit about the margin cadence. So when you think about the revenues in the second quarter, excluding the impact of FX, I would say we were short about $20 million in revenue in the quarter, all of which was in the Prepared Food and Beverage segment. And if you take a look at that, about half of that was from logistics delays and the other half associated with some of these production inefficiencies with some of the moves we're making within our facilities. So that $20 million, we do feel is really just changes the cadence moving from Q2 into Q3. And then obviously, we're trying to be very thoughtful in terms of the Q3 guidance to account for any other inefficiencies that we see or any other logistics challenges. So we've essentially redistributed that $20 million across the back half of the year. That $20 million obviously comes with a margin impact in the quarter, which hurt the PFB margins. Typically, we look at somewhere in the range of flow-through on margins of 25%, sometimes 30%. So it was, I'll call it, a $5 million, maybe $6 million impact on EBITDA just from the revenue. And again, that will flow through here in the back half. So in terms of the margin cadence on PFB, I think Matthew can give some color there.
Yes, Mig, I think what we expect to see in Q3 for the Prepared Food and Beverage segment is about a 25 to 50 basis point year-over-year improvement from Q3 of last year. And then we expect to see improved margins from Q3 to Q4 of probably about another 100 basis points or so. So you can see the sequential improvement from Q2 to Q3 to Q4 as we work through some of these inefficiencies and see some benefits from the higher volume.
Okay. That's helpful. I mean, that would suggest that in Q4, you would have pretty significant margin expansion in this segment year-over-year, which I guess is good to hear. And then maybe my follow-up, sticking with margins here. Protein had much better margin than I was anticipating, but presumably, there's a good chunk contribution from the IEEPA refunds, maybe you can clarify that. And a similar question here, how do we think about margins in the back half?
Right. Yes, so you're correct that it was about 24% margins for Protein in the second quarter. There was about a 200 basis point benefit from the tariff refunds. So they've been running in the low to mid-20s. We would expect that general cadence to continue through the back half. Keep in mind that they'll have a higher mix of equipment versus aftermarket, so the mix is changing a little bit. As you know, the flow-through on equipment is a little bit less than the flow-through on some of the aftermarket, so they will be relatively flat in the back half. And just generally speaking, going back to PFB and the margin progression, we are going to start to see some of the benefits of some of these facility combinations as well as the AGV restructuring that Matthew mentioned in the prepared remarks. So that's part of the reason why you're seeing maybe a faster ramp-up than you might otherwise expect.
We will take our next question from Justin Ages with CJS Securities.
You mentioned ongoing strength in poultry. I was just wondering if you could elaborate on some of the strength in Protein Solutions outside of that poultry category?
Yes. So we have pork, beef, fish and poultry. Poultry is certainly the largest segment and continues to show strength. We're particularly excited about some of the investments we're starting to see on the Prepared Food side. You probably heard from some of our customers speaking about some of the investments we're making there, so we saw some really nice progress there; that's actually within the PFB segment. But specific to the Protein segment, we do expect continued investments even on the primary and secondary side of poultry. On the fish side and on the pork side, I would say continued modest strength. It's not as robust as poultry. However, as beef prices continue to be high, pork and fish become alternatives from a consumer perspective, and we are seeing some decent volume there. So the backlog and the orders were fairly strong in the second quarter, and the outlook is generally positive. The weakest part by far is the beef side, given the lack of cattle inventory for the processors. So we're not seeing much in the way of investments on the beef side. For your reference, beef is less than 5% of our Protein Solutions portfolio.
That's helpful, Brian. And then you mentioned outside of the restructuring in the AGV business, you mentioned that the business itself was improving, I think, in the deck. So just wanted to know if you're seeing that continuing beyond Q2? Is that improvement being sustained?
Yes. Specific to Prepared Food and Beverage, indeed. Again, we are seeing a lot of strength on what we call Prepared Foods, diversified Food and Health, and AGV. Clearly, from a demand perspective, the Prepared Food side is quite strong. This is largely driven by investments not only from the poultry segment, but also other segments, including pork. The other thing I would mention is within that segment, AGV had its strongest quarter in six quarters on volume. AGV was more impacted on the volume side from some of the disruptions from the tariffs as folks pulled back on some of their warehouse automation. That seems to be behind us. It was an extraordinarily strong quarter. That increased volume that we expect in the back half, along with the restructuring, has a nice ramp-up of AGV in the back half, which, to be frank, disappointed in the second quarter: while AGV saw some improvements from the first quarter to the second quarter as we had hoped, it just didn't reach the levels that we had anticipated, again in part motivating some of the restructuring. But that, coupled with the higher volume, should have a nice ramp-up here in the back half of the year.
We will take our next question from Ross Sparenblek with William Blair.
Maybe just starting with pricing actions. Can you remind us where we stand in the backlog from the 2025 actions? And then how we should think about the impact of this inflationary cost and the catch-up of additional pricing actions throughout 2026?
Yes. So when you think about the backlog, that's obviously 90% of the backlog on the equipment side. The pricing actions that we took in the back half of last year and earlier this year were associated with known costs. As we quote each project, we have known costs for goods and materials, so that's embedded into the numbers. I do think that is reflected in the margin guidance that we have. In the current environment, we are seeing a lot of inflation on logistics in particular. I do think we didn't recover all of that in the second quarter, so there was some leakage. If you think about logistics, we spend more than $100 million a year in logistics, and about 60% to 65% of that is on inbound logistics and intercompany logistics. That's a little bit harder to pass through. Outbound logistics we do pass through to our customers as we go. So there is a bit of pressure there and a lag between the costs we're seeing and the pricing actions that we've taken here in the second and third quarter. All this is reflected in the updated guidance.
Okay. No, that's helpful. And when we think about the guidance, it sounds like the sensitivity around 2026 on the top line remains primarily this logistics issue. Orders are strong. The backlog is pretty much covering 2026. We have more pricing offset. I'm just trying to think through some of the caution on why we didn't see even a slight guidance range for the year or guidance increase for the year on the top line.
I think we're being prudent given the logistics issue and the work of moving things around some facilities. Given the pressure we saw in the second quarter, we thought it was appropriate to keep the guidance as is. We do have a bit of makeup in the third and fourth quarters from that miss in the second quarter. However, given the second quarter results, we felt it was prudent to keep the revenue guidance flat for the year, even though backlog is at record levels in both Protein and PFB segments.
We will take our next question from Walt Liptak with Seaport Research.
I wanted to ask about the U.S. industrial environment: ISMs are moving up and that seems to be beneficial. You guys have been in a pretty good place with new orders, and it looks like second quarter was pretty good, too. Do you think you're in a different cycle? Or are general industrial trends somehow beneficial for your outlook too?
Certainly, food and food production has somewhat of its own peculiarities. There is a very strong backdrop of protein consumption going on right now, and I think that is unique for our industry. I do think some of the pro-growth initiatives supporting the overall economy are good for us when you think in a reasonable interest rate environment. A strong economy provides confidence, but this protein trend is particularly strong for us. When you include the protein exposure we have within our PFB segment, about 70% of our overall revenues are associated with the protein market. That has been helpful. Within our businesses, you still see some pockets of weakness that buck the overall industrial trends because some CPG companies are a little weaker right now, but the benefit of JBT Marel with our broad portfolio is that we can provide support wherever our customers are investing. Right now, that happens to be very strong in proteins across both Protein and PFB segments.
I appreciate that. With the factory consolidations and relocations being difficult, timing issues are understandable. When do you think the consolidations will be completed? By the end of the year, or into 2027?
There will be a phase-in. We started some in Q2, another wraps up in the back half of this year, and then two larger facilities will happen in 2027. One should be done by mid-2027 and another by the end of 2027. It's a phased approach and depends on local laws, works councils, and taking a pace that does not overwhelm the receiving plant. We saw a bit of pressure on the receiving plant in Q2, so we're being thoughtful about that. One nice benefit is the receiving plants are already manufacturing these products, which helps. But overall, it phases in through the end of 2027.
I think that's an important differentiation to make: the experiences we're having now with consolidation involve moving product to plants that haven't produced that product before, versus the moves in 2027 which are more about consolidating production into one facility that has produced that product. The transitions in 2027 will be a lot smoother compared to what we're experiencing in Q2 and Q3 of this year.
Okay. Great. And maybe a final one for me: on capital allocation, you announced a share buyback of $200 million. Can you talk about the buyback versus M&A or what you're seeing in the environment?
Yes, Walt. We're still really focused on the integration of the two companies. M&A is something that's in the future. With the buyback announced in Q2, we can choose between debt paydown and share buybacks. We've chosen to do share buybacks opportunistically relative to market price and our expectations. We'll continue to be opportunistic going forward and decide in the short to medium term between debt paydown and share buybacks.
What we've also discussed is management capacity. As Matthew said, we're laser-focused on maximizing the benefits of the JBT and Marel combination. There's still a lot of work on the footprint and other areas, so we're focused there. We do believe and anticipate there will be a time when M&A will be a lever to accelerate our strategic journey and strengthen our offering.
We will move next to Ian Zaffino with Oppenheimer.
On PFB, not to beat a dead horse here, but what are your customers seeing as far as their end customer demand? What are they saying about the state of the consumer? Do they feel good? I know you gave a lot of commentary on your customers, but maybe you could talk a little bit about your customers' customers?
I would say it is very mixed. On some of our CPG customers, they are seeing trade-offs from higher-priced branded products to more generic products. There is a fair amount of activity at the consumer level and it depends on the category. We still see some impacts from GLP-1 adoption, which is net positive for us given the protein focus. In categories like snacks and sweets, you're seeing shifting consumer behavior. What we hear a lot from our customers is that they need to be responsive in terms of product innovation, different sizing, different flavors, even adding protein aspects to different offerings. So there's noise and churn. However, with a generally strong backdrop and significant customer focus—over 70% exposure to protein—we're net positive. There is still noise on the CPG side which may take time to settle out as inflation works through the system.
To add a little, on the consumer side customers on the protein side have been clear that they still see good demand. Consumers don't stop consuming protein, which makes it a great category. It's more about optimizing within protein, where we have good exposure and diversification across different protein segments. We're also seeing more value-added prepared foods pick up, which should help our PFB segment, as we saw on the order side in Q2.
Can you give us an update or some color on where the USDA is as far as speeding up inspection line speeds for chickens? What does that mean for you as far as addressable market or opportunity? Any specifics would be helpful.
We've been engaged with the USDA, provided white papers and answered questions about line speeds. We currently expect some kind of decision either late summer or early fall, though with government timelines there's uncertainty. The U.S. line speeds are currently at 140 birds per minute, and with waivers up to 175 birds per minute, compared to Europe which averages 240 birds per minute. The U.S. is at a productivity disadvantage. With over 350 lines in the U.S. and less than 20% running at 175 birds per minute, a permanent change to 175 would be a durable tailwind and would take multiple years to play out. We are hopeful and excited about what that could mean, and we hope to see a decision in the third quarter.
To highlight, our value proposition is stronger as line speed increases. We have leading technology able to operate at higher speeds, which is a clear differentiation versus competitors.
We'll take a follow-up from Mig Dobre with Baird.
Just one quick question. When we're looking at your orders over the past three quarters, they've been remarkably consistent between about $1.3 billion and $1.7 billion. One concern is that there's been a big investment cycle in poultry and eventually that might run its course. How do you think about this going forward in terms of visibility on orders? As you think about 2027, is there a mix shift to consider between the two segments, maybe away from Protein Solutions and more towards Prepared Food and Beverage, where demand and orders have picked up? Any context would be helpful.
From our customers' perspective, there is a lot of poultry demand right now; poultry is by far the #1 protein and could sell more per capita than beef and pork combined at some point. The strong trends are good for us on the primary and secondary side. That said, over the last year or so there has been tremendous investment on primary and secondary, and in the second quarter the Prepared Foods side actually lapped the primary and secondary side in terms of investment. Our Prepared Foods business was about 15% order growth year-over-year, which was strong. Customers are shifting some commodity-based volume to value-added prepared foods. We saw strong projects in Q2 and that pipeline remains strong. The primary and secondary pipeline is also strong globally as regions want to become more self-sufficient in protein production. As of today, we have backlog going well into 2027 and the pipeline remains strong, so we feel very good about 2027 on the protein side.
This concludes the question-and-answer session. I'd like to turn the program back over to Mr. Brian Deck for closing remarks.
Thank you all for joining us this morning. As always, our Investor Relations team is available if you have any additional questions. Thank you.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.