Earnings call transcript: JBTMarel Q2 2025 earnings beat forecasts, stock surges

JBTMarel Corp reported its second-quarter earnings for 2025, surpassing expectations with an adjusted earnings per share (EPS) of $1.49, exceeding the forecasted $1.27. Revenue reached $935 million, outperforming the anticipated $816.44 million. This resulted in a revenue surprise of 14.5%. Following the earnings announcement, JBTMarel’s stock climbed 6.95%, closing at $133.62, reflecting investor optimism. According to InvestingPro data, the stock is currently trading above its Fair Value, with a market capitalization of $7.4 billion and impressive year-to-date returns of 5.3%.

Key Takeaways

• JBTMarel’s Q2 2025 EPS of $1.49 beat expectations by 17.32%.
• Revenue increased by 10% year-over-year, reaching $935 million.
• Stock price surged by 6.95% post-earnings announcement.
• Company achieved $5 million in operating expense synergies.
• Poultry sector remains the strongest market for JBTMarel.

Company Performance

JBTMarel demonstrated robust performance in Q2 2025, with a notable 10% year-over-year increase in revenue. The company’s strategic focus on integrated line solutions and expanding cross-selling opportunities across poultry, meat, and seafood markets contributed to its strong showing. The leverage ratio improved to 3.4x, down from 4x at transaction close, highlighting effective financial management.

Financial Highlights

• Revenue: $935 million (+10% YoY)
• Adjusted EPS: $1.49
• Adjusted EBITDA margin: 16.7%
• Free cash flow: $106 million

Earnings vs. Forecast

JBTMarel’s Q2 2025 earnings exceeded expectations, with an EPS of $1.49 compared to the forecasted $1.27, marking a 17.32% surprise. Revenue also surpassed predictions, reaching $935 million against a forecast of $816.44 million, reflecting a 14.5% surprise. This performance indicates strong operational execution and market demand.

Market Reaction

Following the earnings announcement, JBTMarel’s stock price rose by 6.95%, closing at $133.62. This increase reflects positive investor sentiment, driven by the company’s strong financial performance and optimistic guidance. The stock’s momentum is evident in its impressive one-year total return of 48.93%, as tracked by InvestingPro. Currently trading near its 52-week high, the stock has shown remarkable strength with analyst targets suggesting potential further upside.

Outlook & Guidance

JBTMarel has provided a full-year 2025 revenue guidance of $3.7 billion, with an adjusted EPS forecast of $5.45 to $6.15. The company aims for an adjusted EBITDA margin of 15.25-16% and targets mid-teen margins in its meat and fish businesses by 2027. These projections underscore JBTMarel’s growth ambitions and strategic initiatives.

Executive Commentary

CEO Brian Deck stated, "We are already demonstrating that we are better together," emphasizing the synergies achieved post-merger. Arne Sigurdsson, President, highlighted the company’s strategic flexibility, noting, "We have the flexibility to produce our products in the region where our customers are located."

Risks and Challenges

• Tariffs could impact quarterly results by $10-15 million.
• Supply chain disruptions remain a potential challenge.
• Geographic market variability, with softness in North America and "choppy" conditions in Asia Pacific.
• Dependence on poultry market strength for sustained growth.

Q&A

During the earnings call, analysts inquired about the impact of tariffs and the company’s supply chain strategies. Management reassured that order delays were minimal and expressed confidence in their ability to mitigate tariff impacts through strategic adjustments. The positive outlook on the poultry market was also a focal point, with investments expected to continue through 2026.

Full transcript - JBTMarel Corp (JBTM) Q2 2025:

Tiffany, Conference Operator: Welcome to JBT Morell’s Earnings Conference Call for the 2025. My name is Tiffany, 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 J. B. T. Morell’s Senior Director of Investor Relations, Marley Spangler, to begin today’s conference.

Marley Spangler, Senior Director of Investor Relations, JBT Morell: Thank you, Tiffany. Good morning, everyone, and thank you for joining our conference call. With me on the call today is Chief Executive Officer, Brian Deck President, Arne 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 our press release and eight ks filing. JBT Morrow’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 measures. A reconciliation of these measures to the most comparable GAAP measures can be found in the Investor Relations section of our website. With that, I’ll turn the call over to Brian.

Brian Deck, Chief Executive Officer, JBT Morell: Thanks, Marley. JBT posted a strong performance in the second quarter, aided by a few factors including mix and foreign exchange that Matt will explain. Adjusted EBITDA margins and adjusted EPS exceeded our expectations. We also generated excellent cash flow and made significant progress deleveraging our balance sheet. Moreover, as Arne will highlight, the integration process is on track as we work to execute on the tremendous commercial, operational and financial benefits of the JBTRL combination.

In terms of the demand environment, we booked healthy orders even as we navigated a dynamic macroeconomic backdrop. Moreover, while certain CPG companies, QSRs and full service restaurants have seen some pressure in connection with the consumer shifting to value seeking trends, our extremely broad portfolio and end market exposures means that we can serve our customers regardless of changes in consumer food consumption patterns or channels. Combined JBT Morale orders totaled $938,000,000 which included $22,000,000 in favorable year over year foreign exchange translation. 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 into next year. Beyond poultry, we saw good quarterly demand for meat, beverages, fruit and vegetables and ready meals.

For the quarter, pharma and pet food were softer, while seafood and material handling were neutral. Geographically speaking, EMEA was the strongest region. While North America was relatively soft in the period, the overall demand environment and pipeline is solid. Latin America was strong, while Asia Pacific continues to be choppy. We ended the quarter with a backlog of $1,400,000,000 which provides meaningful support for revenue conversion in the back half of the year.

Further to the commercial front, as we progress with integration, we’re looking to capitalize on the expanded portfolio of offerings and are excited about the ability to cross sell the legacy JBT and Morale solutions. Arne will provide color on the developing benefits of our combined offering. Regarding the tariff situation, we are taking steps to mitigate the impact on direct material costs, including negotiations with existing suppliers, some repositioning of where we source parts and consideration for where we assemble equipment as well as pricing actions. We are pleased with our first half performance. And given expectations for backlog conversion, synergy savings and greater clarity around tariffs, especially regarding Europe, we are reestablishing full year earnings guidance.

Let me turn the call over to Matt to discuss our second quarter performance and outlook for the full year.

Matt Meister, Chief Financial Officer, JBT Morell: Thanks, Brian. For the 2025, total revenue was $935,000,000 and included approximately $21,000,000 in favorable year over year foreign exchange translation impact. Revenue exceeded the midpoint of our guidance by about $35,000,000 The main drivers of the outperformance versus our expectations were approximately $25,000,000 in higher than anticipated recurring revenue and $8,000,000 of favorable FX. In the quarter, we realized year over year synergy savings of $5,000,000 in operating expense and an additional $3,000,000 in supply chain. The progress we have made on synergies puts us on track to achieve our expected in year realized cost savings of $35,000,000 to $40,000,000 and expected annualized run rate savings of 80,000,000 to $90,000,000 exiting 2025.

In the second quarter, we incurred approximately $9,000,000 in gross tariff costs. The net impact of tariffs in the quarter was essentially offset by the benefits of inventory on hand and mitigating actions. We are working with our supply base as well as evaluating the potential for further pricing actions to mitigate the rising impact of tariffs on margins. Our second quarter adjusted EBITDA margin of 16.7% outperformed the midpoint of our guidance by about 180 basis points. As Brian mentioned, this is primarily due to a favorable mix of higher recurring revenue and higher margin equipment as well as benefits from our focus on productivity improvements and cost controls.

Second quarter GAAP EPS was $07 and adjusted EPS was $1.49 As a reminder, our adjusted EPS calculations exclude certain items such as acquisition related amortization expense and restructuring costs. In the second quarter, we also incurred an $11,000,000 impairment charge on a joint venture investment, which we exited as a result of the JBT combination with Morell. On a segment basis, JBT second quarter revenue increased 13% year over year or approximately 11% on a constant currency basis. JBT segment adjusted EBITDA of $82,000,000 increased 28% and the adjusted EBITDA margin improved two twenty basis points from the prior year period to 18%. This was primarily due to the benefits of favorable recurring revenue mix and flow through on the higher volume.

Segment revenue in the second quarter was $480,000,000 MREL segment adjusted EBITDA was $75,000,000 representing a margin of 15.5%. Morell’s strong profitability in the quarter was a result of savings from integration synergies and restructuring actions, favorable revenue mix and better margins in the meat and fish businesses. Through the 2025, we generated free cash flow of $106,000,000 including $88,000,000 in the second quarter, which was supported by good working capital management and customer deposits. The quarterly improvement in free cash flow affirms our view of the solid cash flow model of the combined businesses. As a result of our strong cash flow generation, we were able to make significant progress delevering our balance sheet.

At the end of the second quarter, leverage decreased to below 3.4 times compared to our leverage ratio of 3.8 times in the first quarter and four times at the close of the transaction. Our bank leverage ratio, which includes the benefit of certain run rate synergy savings, was 2.8 times as of June 30. This provides us significant liquidity of approximately $1,300,000,000 As Brian mentioned, we have reestablished full year 2025 guidance, given greater clarity around the tariff environment, including a 15% rate on Europe, coupled with the strength of our backlog. For full year 2025, we expect revenue to be $3,700,000,000 at the midpoint of our guidance. This includes approximately 70,000,000 to $85,000,000 in favorable foreign exchange translation benefit on a year over year basis.

We are forecasting full year adjusted EBITDA margin to be 15.25 to 16% and adjusted EPS of $5.45 to $6.15 Adjusted EPS excludes certain one time items and acquisition related costs, which are outlined in yesterday’s press release and investor presentation. In terms of the third quarter, we expect revenue to be flat sequentially, which includes a slightly favorable FX translation impact. We expect sequential margins to decline by approximately 100 basis points as a result of increased net tariff costs and less favorable mix, partially offset by synergy savings. With that, let me turn the call over to Arne, who will discuss the progress and specific benefits we are realizing as a result of the business combination and integration.

Arne Sigurdsson, President, JBT Morell: Thanks, Matt. Since our call three months ago, there has been significant activity and progress on the integration front, and I’m really proud of what our JBT model team has accomplished for our customers and broader stakeholders. One of the greatest benefits of the combination of JBT and Mare lies in integrating our complementary portfolios to provide more holistic solutions, making us an even more valuable partner to our customers. Our customers are seeking a preferred partner who has the process know how and product offering across the value chain. It simplifies installation, commissioning and service as our customers have one accountable counterpart.

It also allows them to optimize product flow and increase efficiency as modules are designed as a part of a full line system with software to control the process and provide access to real time data and actionable insights. This is the unique value proposition that JBT model will continue to refine as we integrate our core technology, software and digital solutions and service network. For example, in poultry, the primary process is designed to run at extremely high volume, up to two fifty birds per minute, and it can include more than 20 critical process steps, making it tremendously valuable for our customers that each individual piece of equipment works seamlessly with the next. The optimal way to achieve this outcome is with a fully integrated line, which limits product losses and ensures seamless flow with fewer people, allowing the customer to improve yield, throughput and quality. And as our customers’ products move from primary processing to secondary and further down the line, they can capture the benefits of our software and digital solutions’ full traceability and functionality to optimize production and uptime.

For example, at one customer, our integrated line and software reduced trim waste by two thirds while increasing throughput 20%. As JBT modeled, we will continue on this journey and build systems that combine our key technologies and advanced process know how. As an example, we are combining JBT’s DSI water jet portioner with models SensorX inspection, grading and material handling technologies to create a high value modular system within secondary poultry processing. This can automate what is traditionally a highly labor intensive process. It also removes the burden on the customer’s engineering and project management teams related to the design, installation, commissioning and optimization of the system.

And it allows JBT model to transition further from unit sales to system sales, creating a deeper partnership and an opportunity to provide more consistent, robust and effective service and parts delivery. While we are in the early stages of integrating the portfolio from a technology and software standpoint, we are already capturing benefits from cross selling our respective product lines. This is the result of our broader portfolio and transition to an end market focused go to market strategy. We have an account manager for each customer who represents the entire JBT model portfolio relevant to that customer. In poultry, where we are the furthest along, our combined pipeline of opportunities in North America has grown by approximately 15% in the last six months as we layer in our synergistic commercial opportunities.

Overall, the depth of Mato’s customer relationships in poultry, meat and seafood has created opportunities to sell legacy JBT downstream equipment such as freezers and DSI portioners. And JBT’s diversified end markets allow for selling some of Mato’s more end market agnostic products. Another key benefit of the combination is our expanded global service network. Given our combined scale, we have realigned our service organization from a centralized model to one connected to each business. We believe this will allow us to be more responsive to customer needs, improve customer satisfaction and increase our wallet share.

Beyond delivering value for customers, our global operating footprint and capacity provide advantages to our internal operating efficiency in the medium to long term. We have the flexibility to produce our products in the region where our customers are located, providing us with optionality as tariffs continue to evolve. Additionally, we are evaluating opportunities to optimize existing capacity utilization across our manufacturing facilities. We are also advancing our continuous improvement initiatives to elevate the performance of our meat and fish businesses. As an example, our eightytwenty analysis of the fish business shows a high concentration of top customers and regions, which gives us the opportunity to focus our go to market strategy.

Moreover, we have better insights into the performance of individual product lines, which is creating a clearer path for project selection, pricing decisions and resource allocation. We are taking similar actions in our meat business as we focus on project selectivity, reduce engineering complexity through greater standardization and improve service quality, which should improve our wallet share of recurring revenue. Taken together, these actions give us confidence as we progress toward our goal of mid teen margins in both the fish and meat business in 2027. With that, let me turn the call back to Brian.

Brian Deck, Chief Executive Officer, JBT Morell: Thanks, Arne. As I step back and look at the value created by the JBT Morrell combination, a few things a few themes come to mind. We are already demonstrating that we are better together in terms of what we can deliver for customers and other stakeholders. As Arne addressed, the combination of our complementary portfolios makes us an even more important partner to customers with full line solutions that enhance automation, yield, safety and efficiency. Internally, our continuous improvement work is enabling us to optimize our operating efficiency.

And as Matt detailed, our business model provides strong cash generation, which has enabled us to quickly deleverage our balance sheet and provide the liquidity to support our business strategy. I am proud of all the hard work our team has done as we capture the benefits of the businesses coming together. Looking forward, we plan to build off the momentum for our integration initiatives of our integration initiatives, capturing cost and revenue synergies and bringing even greater value as we transform the future of food. With that, let’s open the call to questions. Operator?

Tiffany, Conference Operator: Your first question comes from Ross Sparenblatt with William Blair. Please go ahead.

Ross Sparenblatt, Analyst, William Blair: Good morning guys. Good morning. Hey, it was nice to see the 2025 guidance come back. So, yeah, definitely underwriting some confidence. Thinking through your comments on poultry, you guys have about a year of visibility left there, but it, you know, kinda read throughs with customers seems pretty optimistic.

So is there anything you can provide me on customer conversations and just kinda getting where we are in the cycle? I mean, this should probably go on beyond 2026, I have to imagine, on reinvestment in poultry?

Brian Deck, Chief Executive Officer, JBT Morell: Sure. It’s a little too early to talk beyond the front half of 2026. And I would say we have good visibility into the front half of 2026. But what you’ve seen from some of the more recent earnings announcements, the poultry companies are making good money right now. And we’re seeing a combination of investments in some greenfield facilities in areas where they think they can make more money, some on the value added side as it relates to some of the downstream products.

But we’re also seeing a lot of investments that support automation and efficiency of operations, including yield enhancements. A lot of these facilities over years were built kind of added upon each other and not as completely as efficient as they should be. So now that they’ve got capital available, it does allow them to take a step back, look at their footprint, where they should do some brownfields or realignment of their lines and get that efficiency and automation out of it. And then but in other places, we are seeing greenfield investments, frankly, on both some of the primary and secondary side as well as on the downstream side.

Arne Sigurdsson, President, JBT Morell: I think just to add, I think we’re also excited about the opportunity kind of as kind of now there’s ability to increase line speeds in The U. S. And we have developed a very good solution, which kind of helps our customers with that where we have protection. So kind of a lot of encouraging conversation that should help us kind of over the next quarters and into 2026.

Ross Sparenblatt, Analyst, William Blair: No. That’s great. On the line fees, Arne, was there anything that passed on the regulations from the Biden administration that was previously holding that back? Have you guys found a workaround? Or has that changed?

I know you missed it.

Arne Sigurdsson, President, JBT Morell: Yes. So they’re used to kind of the limit was 140 bpm with some waivers up to 175. But now we kind of the USDF approved factories going up to two fifty bpm, but you need a certain workaround for the inspection. So you basically have you’re able to kind split the line to slow it down in certain areas where the inspector is. So now there’s more flexibility for our customers in North America to implement that.

Ross Sparenblatt, Analyst, William Blair: Okay. And then can you give us a sense on the orders, what the benefit was from cross selling, realizing that you guys had a pretty strong first quarter there as well?

Arne Sigurdsson, President, JBT Morell: Yes. I mean, we’re very pleased with the progress. And we are already seeing some wins and kind of in the second quarter, kind of just to give you a sense, was kind of the order of magnitude of 5,000,000 to $10,000,000 And the pipeline is very promising. And I think what we’re really kind of pleased with is like this is one of the reasons for the deal. Kind of it is that improved value proposition of the broader portfolio and our ability to create integrated lines.

So and this is kind of just evidence that the customers are seeing the logic of the combination of the two businesses. And like I kind of referred to in the prepared remarks, I mean, kind of already kind of having a simpler kind of easier buying process with one counterpart and just knowing also that we will take care and partner with our customers in the installation, commissioning and service after we’ve kind of brought the line up to speed. I think that is something that our customers are valuing. And then further down, we’ll integrate the equipment kind of more from a technology standpoint. But this is already very encouraging,

Brian Deck, Chief Executive Officer, JBT Morell: I would say.

Ross Sparenblatt, Analyst, William Blair: That’s great. All right. I’ll hop back in queue. Thanks guys.

Brian Deck, Chief Executive Officer, JBT Morell: Thank you.

Tiffany, Conference Operator: Your next question comes from the line of Mig Dobre with R. W. Baird. Please go ahead.

Mig Dobre, Analyst, R.W. Baird: Yes. Good morning. Thank you for the time. Arne, maybe we can talk a little bit about the margin performance at Morrell. Mean, my records are not perfect here, but I was looking through going back a little bit.

And this might be the strongest margin quarter we’ve seen there since maybe the 2022. And I know that this is not just synergies. It can’t be just numerically. So there there’s gotta be something different going on versus, say, six months ago. Can outline what’s been going on with the fish business, the meat business?

Basically, where is this margin improvement coming from?

Matt Meister, Chief Financial Officer, JBT Morell: Hey, Mig. I’ll start, Matt, and then I’ll hand it over to Arne to provide a little more details around some of the improvements especially in meat and fish. But initially I’d say the benefits and it’s closer to about 400 basis points improvement over what we estimate as The U. S. GAAP adjusted EBITDA last year.

So it’s really good improvement and we’re really excited about the progress that we’re seeing on the Morrell performance. It’s primarily driven by some of the integration synergies savings as well as some of the restructuring efforts that the Morrell business initiated last year before the transaction closed. Additionally, we did see in the Morrell business a high mix of recurring revenue and aftermarket, which tends to have a more favorable margin profile. And then finally, I think we just saw the benefits of higher volume so that 400 basis point improvement is what we’re seeing And we’re excited again about the improvement that we’re seeing at Meat and Fish from the eightytwenty work that the two businesses have put in place.

Arne Sigurdsson, President, JBT Morell: Yes. I mean, I think it’s kind of sometimes it kind of all comes together and there are a lot of things that kind of fall in place. And I think this is kind of one of those situations because I mean, we’ve also kind of just kind of Matt covered this well, but I think it’s also worth to mention that orders have been picking up over the last few quarters. That can also help with planning on the manufacturing side, which helps to increase the efficiency. And then on the pork side, we are seeing gradual improvement and we’re past the bottom with healthy or kind of better orders in few quarters now.

So I would just say that it’s kind of a few different things coming together, but it’s very I’m very glad and kind of to see just how kind of the progress. And we’re seeing the results of the hard work that people have been putting in and the actions that have been taken.

Brian Deck, Chief Executive Officer, JBT Morell: Yes. And I would just one final comment that some of the discipline on certain businesses on project selectivity and resource allocation is really important. And as Arne mentioned, there’s some incremental support from the mix of aftermarket as well as some of the businesses coming back from a volume perspective helps as well. But overall, we saw similar overall, as Matt mentioned, the Marelle margins are up somewhere in the range of 400 basis points year over year and meat and fish had similar type improvements individually.

Mig Dobre, Analyst, R.W. Baird: And to follow-up on this, I think I heard you saying that by 2027, you expect to get to mid teens margins in in fish and in meat. Again, we’re talking about morale here. If if you get that, is there maybe a way you can help us quantify a little bit in terms of what the EBITDA list would be simply from getting there within this business?

Brian Deck, Chief Executive Officer, JBT Morell: Right. So if you think about those businesses collectively, they’re somewhere in the range of 500 to $600,000,000 of revenue. So that will be you could do the math. But you’re talking anywhere from five really close to 1,000 basis points improvement on those businesses. So you can kind of do a little bit of the math there.

Anywhere between $507,100 sorry, Meat is at a higher starting point than fish. So it’s probably more of the closer to the bottom end of that 500 to 1,000 basis point range and fish would be at a higher point of that range.

Mig Dobre, Analyst, R.W. Baird: That’s very helpful. Maybe last question for me, and I apologize for the Excel kind of based question here. But as I was looking at your full year guidance, I was looking at for Q3, trying to do some math on what that implies for Q4. And if my math is right, it implies somewhere just north of $160,000,000 of EBITDA at the midpoint. And I’m sort of curious in terms of the moving pieces as far as what gets us there.

It looks a little bit unusual relative to seasonality. Usually, the fourth quarter is the strongest. That’s where you see the highest margins. And at least optically, it wouldn’t appear to be the case this time around. So talk a little bit maybe about tariffs.

I’m sure that that’s part of it, about $12,000,000. But is there anything else in here? Or maybe you’re just, I don’t know, conservative in your approach at this point?

Matt Meister, Chief Financial Officer, JBT Morell: Yes. I think on the EBITDA dollars, Mig, you’re in the ballpark in terms of what the math would suggest. And based on sort of our guidance and the midpoint of our guidance range, it is still the higher quarter from a margin perspective in the year. But Q2 was obviously a very good quarter from a margin perspective as well. And I think what we’re seeing is some changes in seasonality than what you might have seen in the past for just JBT legacy as the MRL business has a little more weight in Europe, which creates a little bit of seasonality in the summer.

But it’s we’re still confident in our ability to deliver sort of high 1617% margin in the fourth quarter driven by the increase in equipment revenue, which tends to have a little bit lower margins as well as we talked about in the prepared remarks, the impact of tariffs, we do see that continuing to be a pretty significant headwind on a quarterly basis. So those are kind of the headwinds from a margin perspective is the higher nonrecurring revenue and the continued tariff impact that we’re seeing in the

Brian Deck, Chief Executive Officer, JBT Morell: back half of the year. But in any case, will still be our seasonally strongest both from a revenue and margin perspective, just maybe not the range that you would normally see. In part, you think about the Morels business, it’s there’s a lot of projects coming through. So it’s a little bit, I’ll say, muted relative to, I would say, the traditional JBT mix.

Mig Dobre, Analyst, R.W. Baird: All right. Got it. Thank you.

Tiffany, Conference Operator: Your next question comes from the line of Saree Boroditsky with Jefferies. Please go ahead.

Saree Boroditsky, Analyst, Jefferies: Hi. Thanks for taking the questions. Maybe just quickly, bullying on the last commentary on the guidance. I believe Morell stepped down sequentially in 3Q under normal seasonality. So just some ply that JBT is stepping up first 2Q levels or just how you’re thinking about growth by segment for the remainder of the year?

Matt Meister, Chief Financial Officer, JBT Morell: Yes. We would see likely a decrease on both from Q2 to Q3 again thinking about the mix in revenue for both segments being a little bit more of weighted towards equipment and non recurring revenue, which has a lower margin profile than recurring revenue. So both will experience that and as well as both will have the impact from the tariff environment that we’re seeing. So I’d say you’d see a decrease on both segments running in from Q2 to Q3. And then as volume picks up in the fourth quarter probably a reversion back to higher margins in the fourth quarter for both segments.

So it’s kind of a cadence that looks similar to that, a dip and then back up into Q4.

Saree Boroditsky, Analyst, Jefferies: I appreciate all the color on the tariffs and the great slide that you have in the deck. You talked about the 100 basis point headwind in 3Q which is the net tariff cost. Just expectations for that in 4Q related to tariffs and how you expect to enter 2026 based on the current Thank you.

Brian Deck, Chief Executive Officer, JBT Morell: Sure. Yes. So we are expecting somewhere in the range of that 10,000,000 to $15,000,000 net impact per quarter, probably closer to the $10,000,000 range in Q3 and closer to the $15,000,000 range in Q4. And during the course of the rest of this year, we are implementing supply actions to offset things. So we are moving some of our parts sourcing from Europe to The U.

S. And even considering some of our own assembly operations where we can in that short term. But I do think there will be some bleed over into the front half of 2026. We also consistently look at our pricing environment. But I do think it is incumbent on us as a good supplier to our customers that we should do everything we can to offset the cost of tariffs before we think about price increases.

That said, we will consider them where appropriate. We have done some of that here in the we did do some of that in the second quarter here. So it’s an all in strategy on offsetting those tariff impacts. We gave you the numbers specifically for Q4, but then some slight impact in the front half of Q1 front half of next year. But the intention sorry, and just one last comment.

But the intention here would to get the price cost neutral as soon as we can. And our expectation would be somewhere in that first quarter, maybe second quarter.

Tiffany, Conference Operator: Your next question comes from Justin Ages with CJS Securities. Please go ahead.

Justin Ages, Analyst, CJS Securities: Hi, good morning all.

Brian Deck, Chief Executive Officer, JBT Morell: Good morning.

Justin Ages, Analyst, CJS Securities: I appreciate the color on the tariffs. Had a question now that we have more clarity there. Have you had any conversations with any of your customers about potential delays in orders or anything that might give pause to their business?

Brian Deck, Chief Executive Officer, JBT Morell: We have seen some, yes. Episodic, not system wide by any means. We have seen a handful of orders where customers are making assessments more so for folks that are looking to import food into The U. S. Just to give you an example, we had a coconut water vendor sorry, customer that now that the tariffs on Thailand are very high, took a pause on that project.

I’m aware of one or two other projects, but it is very episodic, very kind of customer specific. And we have seen literally zero, best that I can tell, on the protein side, which is more than half of our business. So protein seems fairly I don’t want say immune, but this doesn’t seem to be being impacted in a meaningful way at all. So I would say it’s very episodic.

Justin Ages, Analyst, CJS Securities: All right. That’s very helpful. And then on the mitigation effort, you mentioned last quarter and then this quarter about potentially moving equipment or facilities. Can you give us an update on where we are? Are you still looking at identifying the best locations, jurisdictions?

Or have we moved a step beyond that?

Brian Deck, Chief Executive Officer, JBT Morell: No, we haven’t moved a step beyond that yet because we obviously just got clarity on tariffs here in the last thirty days or so. So I would say we are still in that assessment phase looking at our overall footprint. So by the end of the year, we should have a well developed plan of what our operational strategy will be for the next year or two.

Ross Sparenblatt, Analyst, William Blair: One color

Arne Sigurdsson, President, JBT Morell: on that though is we do have, for example, in our kind of primary and cut up in deep bone business in poultry, we already have kind of a dual plant, U. S. And Europe, where we can kind of often like when you’re moving production, it’s around drawings, around systems, it’s around engineering. So if you have some of those that infrastructure in place, you can often move a bit faster. That’s an area where we are looking and what we have historically also flexed in the past.

So that’s where we can probably move a little bit faster, just to mention one example.

Justin Ages, Analyst, CJS Securities: All right. That’s helpful. I appreciate you taking the questions.

Brian Deck, Chief Executive Officer, JBT Morell: Thank you.

Tiffany, Conference Operator: Your next question comes from the line of Walter Liptak with Seaport Research. Please go ahead.

Walter Liptak, Analyst, Seaport Research: Hi, thanks. Good morning. Good quarter, guys.

Matt Meister, Chief Financial Officer, JBT Morell: Morning.

Justin Ages, Analyst, CJS Securities: Wanted to ask about

Walter Liptak, Analyst, Seaport Research: just starting with the sector trends and you guys called out that meat part of the business had good orders. I wonder if you could help us understand that a little bit by understanding some of the meat is under a little bit more margin pressure. Where are you seeing those orders? And is that something that’s sustainable?

Brian Deck, Chief Executive Officer, JBT Morell: Sure. What we are seeing is some improvement on the pork side. We’re starting to see some investments in both The U. S. And Europe.

And as we increase, improve our value proposition overall, we think we’re well positioned for that. So really it’s on the pork side. The beef side is weak and expected to remain weak for at least for the foreseeable future. There’s really it takes a long time to grow cattle and the cattle inventory, if you will, or the herd is quite small right now. So there’s no really reason to be investing on the beef side.

But on the pork side, the price cost dynamics for our customers is in pretty decent shape and the demand profiles is improving overall. So we do see some investments there. Also, think it’s worth mentioning that if you look at the meat business in general,

Arne Sigurdsson, President, JBT Morell: there is a big opportunity on automation there. Like in poultry, there is much higher automation. But in meat, especially when you are in kind of you look at kind of the cut up in deep owning rooms like that, that’s where you have a lot of labor intensive processes. And so as the business kind of the fundamentals have I mean, they’re coming off a very of a very difficult environment like our customers are losing money. Now they’re making money.

But it’s going to and it’s been like that for a few quarters. So that’s also why there’s been some stability for a few quarters. There is a pent kind of they haven’t been investing for a while, so the equipment kind of ages and then there’s the automation opportunity that we see. So it’s very encouraging to have now a few quarters where the demand has improved, but we’ll see how that kind of shapes out over the next few quarters.

Walter Liptak, Analyst, Seaport Research: Okay. Yes. Thank you for that. That sounds great. And yes, it’s kind of exciting with the future automation and systems.

Kind of switching gears to the discussion about selling prices and volumes and understanding that you’re trying to do everything you can for your customers to take care of these tariffs. Can you surcharge? Or are you surcharging in the second quarter and for the orders that are coming in? Or and if you didn’t take up prices, how much do you take up prices? How did volumes look versus prices in the second quarter?

Brian Deck, Chief Executive Officer, JBT Morell: Right. So in the second quarter, so we had about if you look at the combined basis, it was about 10% year over year growth. About half of that was on the volume side. And then the rest was split between price and FX. But more broadly speaking, so we did take price increases on parts during the course of the second quarter.

And then obviously on all open quotes for new equipment, we did look to reprice those quotes. And then for equipment in the backlog, it is case by case where we have the ability to add a surcharge or change or have the customers depending on the shipping terms pay the tariffs themselves. So it is very much case by case. So you will have some leakage here, which we mentioned in our guidance in the third and fourth quarter. However, as that pricing dynamics builds into the new orders, that would be that’s where how we get to price cost neutral here over the next few quarters.

Walter Liptak, Analyst, Seaport Research: Okay, great. Are there order delays because of the tariffs? Were they waiting to see where the tariffs shake where they were shaking?

Brian Deck, Chief Executive Officer, JBT Morell: A handful. A handful, yes. But it’s not it’s very episodic. It is not systematic by any means. It’s handful.

Walter Liptak, Analyst, Seaport Research: Okay. Is backlog pricing done now? Are you good through that? Or is there are there

Brian Deck, Chief Executive Officer, JBT Morell: That’s a negotiation ongoing. It always depends on the customers and whatnot. So no, I would not say we are completely done with it.

Mig Dobre, Analyst, R.W. Baird: Great.

Matt Meister, Chief Financial Officer, JBT Morell: Okay.

Brian Deck, Chief Executive Officer, JBT Morell: Because some of the numbers have been moving. I mean, the tariffs just got settled here in the last two weeks or so. So now that we have better visibility, it helps us to continue our conversations with our customers.

Tiffany, Conference Operator: Your next question comes from the line of Ross Sparenblatt with William Blair. Please go ahead.

Ross Sparenblatt, Analyst, William Blair: Guys. Sticking on the price topic, can you just give us a sense of what the benefit was the backlog in the quarter? It looks like the implied was roughly sequentially flat, but there was probably $80,000,000 step up with some FX as well.

Brian Deck, Chief Executive Officer, JBT Morell: Most of the step up in the backlog dollars was because of FX. Right? You would have seen the pricing be embedded into the new orders. Right? But in terms of there’s always an adjustment for the end of the quarter FX, and that was somewhere in the range of $70,000,000 in the backlog.

Ross Sparenblatt, Analyst, William Blair: Okay. Well, then in some parts, can you maybe just elaborate on the strength in the quarter, confidence in kind of the go forward run rate, and then your ability to pass through price as of May

Matt Meister, Chief Financial Officer, JBT Morell: Yes. Any volume

Brian Deck, Chief Executive Officer, JBT Morell: The recurring revenue was tremendous in the second quarter. And by the way, it wasn’t just parts, was also on refurbishment. So we saw a lot of activity on refurbs in the quarter, which is always good news because those are nice margins as well. I would say we do expect some reversion, as Matt said, the Q3 guided, some reversion as we go sequentially from Q2 to Q3. However, generally speaking, it’s a we do see a very good demand environment out there for parts and service and refurbishments.

And we do have the ability on the parts side to be more proactive and reactive to the environment because typically we can announce price increases kind of again, it’s we can do it region by region and sometimes business by business. But we can look at our cost environment and respond relatively quickly typically within thirty days. However, we did do a price increase at the May. So as we get into the back half of the year, we’ll continue to look at what’s appropriate from the price side, but obviously really, really heavy focus on the cost side is what we’re trying to mitigate for the benefit.

Ross Sparenblatt, Analyst, William Blair: Okay. And then is there any seasonality in the parts? Presumably, there’s still operating facilities even in August in Europe. So maybe it’s just a pull forward of refurbishments?

Brian Deck, Chief Executive Officer, JBT Morell: There is. Q3 is lighter just particularly in Europe because of the European vacation cycle. So you see less activity generally. So there is some seasonality kind of I think, Sarah asked the question generally. So we do see seasonality on aftermarket that also affects equipment delivery as well.

And then just as an aside from a recurring revenue perspective, our orange juice lease business seasonality is weak the crop is weaker in Q3 and then picks up in Q4. So that’s another component to our seasonality.

Ross Sparenblatt, Analyst, William Blair: Okay. And then just one more here. Just thinking through the margin exiting the year. Third quarter, the implied synergy capture, I know it’s a fourth quarter kind of a hockey stick, but any updates there? And then also, is R and D, is that fully like for like on the definitional basis now?

I mean, that was a tad bit lower for SAAR estimates.

Matt Meister, Chief Financial Officer, JBT Morell: Ross, certainly we’ll see a continued increase in synergies sequentially from Q2 to Q3. That’s just a function of actions being taken in the quarter kind of getting embedded in Q3 and Q4. We are expecting the benefit of synergies to be a positive to margins by about 75 basis points sequentially. That’s obviously offset by the headwinds from mix and tariffs to get to that 100 basis point drop sequentially. But that is a nice tailwind from synergies.

And what was I can’t remember the second part of your question.

Ross Sparenblatt, Analyst, William Blair: Sorry. Definitional on R and D, I believe that was the last item that had to be converted.

Matt Meister, Chief Financial Officer, JBT Morell: Yes. I think there we are still in the process. I wouldn’t say it’s 100% completed, but there has been we’ve been moving more of the towards the sort of standard definition that we have had historically at JBT for the Morel business, but it’s still a work in process.

Ross Sparenblatt, Analyst, William Blair: Perfect. Nice quarter guys. Thank you.

Mig Dobre, Analyst, R.W. Baird: Thank you.

Tiffany, Conference Operator: Your final question comes from the line of Mig Dobre W. Baird. Please go ahead.

Mig Dobre, Analyst, R.W. Baird: Thanks for taking my follow-up. This is longer call than I’m used to. Just a couple of small questions here. The first one is on is on FX. I I just wanna make sure that I have it clear in terms of what’s embedded for the full year in your in your outlook.

And, you know, maybe a quick reminder here. FX, what sort of margin does this line item typically carry? Like, what’s the contribution margin from FX? Is it dilutive? Is it in line with the company average?

How should we think about it?

Matt Meister, Chief Financial Officer, JBT Morell: Think about it more in line with the company average. You see the FX impacting both the top line and the costs. You might see actually a little bit of headwind from FX because you might produce it in one jurisdiction and sell it in another and get some headwind from that as well. So but I would use about the average.

Brian Deck, Chief Executive Officer, JBT Morell: Yes, that 15%.

Mig Dobre, Analyst, R.W. Baird: And what’s the magnitude for the year?

Matt Meister, Chief Financial Officer, JBT Morell: We’re expecting I think it’s 70,000,000 to $85,000,000 for the year.

Mig Dobre, Analyst, R.W. Baird: Okay. Then last question. You mentioned here that the pipeline has gone up 15%, in in North America and that from the combination of David and Morale, maybe you can talk a little bit about that. And, you know, when you when you talk about the pipeline, what exactly does that mean? Is that, you you know, for patients or customers or, you you know, how what does that number really tell us?

Brian Deck, Chief Executive Officer, JBT Morell: Right. So it’s specific to poultry in North America as I’ll say as a sample, if you will, because again, that’s where we’re furthest along on the integration, if you will. So basically what we did was we looked at our order book immediately prior to the JBT Morel combination, looked at the individual opportunities. And then we said then we looked at it now inclusive of some of the things that we’re quoting that we otherwise probably would not have quoted as independent companies. And when you kind of add that up, there is some noise in there because of the market is a little bit different now than it was six months ago, but it was fairly robust then, it’s fairly robust now.

So there’s a little bit of noise. But what I could tell you just when you start to roll in all these additional opportunities, it does appear that the pipeline is about 15% higher. Now what it does mean now that hasn’t converted to orders at this point, all we’re saying is that at least in terms of within our sales force application, the gross number of opportunities is now larger than it otherwise would have been. So really kind of incumbent upon us to convert those opportunities into orders and obviously sell the value proposition that having more under one vendor base like JBT Morrell is beneficial to the customers and getting into those system sales and integrated sales as opposed to the component sales.

Mig Dobre, Analyst, R.W. Baird: Great. Thank you for the time. Sure.

Tiffany, Conference Operator: That concludes our question and answer session. I will now turn the call back over to Brian Deck for closing remarks.

Brian Deck, Chief Executive Officer, JBT Morell: Thanks, everyone, for joining us this morning. As always, our IR team will be available if you have any questions. Thank you.

Tiffany, Conference Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.

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